HARMONISATION OF INTERNATIONAL JURISDICTIONRULES IN THE EAST AFRICAN COMMUNITY

CLARE NINSIIMA June 2011

East African CommunityOne People One Destiny

Harmonisation of International Jurisdiction Rulesin the

East African Community

A thesis submitted to the Erasmus School of Law, ErasmusUniversity

Rotterdam, the Netherlands, by

Clare Ninsiima

in partial fulfilment of the requirements for obtaining thedegree of

MASTER IN LAWS (LL.M.) in BUSINESS, CORPORATE AND MARITIME LAW

Supervisor: Prof. Dr. Xandra Kramer Co-Reader: Prof. Dr. Filip De Ly

Rotterdam, The Netherlands6th June, 2011

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Clare Ninsiima (350536)LL.M. Business, Corporate and Maritime Law, 2010 - 2011 Erasmus School of Law, Erasmus University Rotterdam Rotterdam, The Netherlands

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Dedication

To my late father Mr. John Byamukama, rested so early and neverlived long enough to see the glory of his beloved daughter.

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Acknowledgements

I would like to express my great sense of appreciation to mysupervisor Dr. Xandra Kramer. Words cannot tell how grateful Iam for all the time you spent guiding me, encouraging me andcorrecting my mistakes. I loved the fact that you tried so hardto bring the best out of me. There is no doubt that without yourconstant motivation, this journey would have been difficult towalk alone. I am fortunate to have had you as a mentor andguide.

I would like to thank my mother for the unconditional love. Mumthank you for trying so hard in this difficult world to do thebest that you could to see me succeed in life. Special thanks goto Mr. and Mrs. Akampurira. All I can say is thank you forloving me. Mother Teresa once said that we cannot do great thingson this earth, only small things with great love. I want you toalways know that your act of kindness is worth more than thegrandest intention. I can therefore gladly say, that for all myachievements, I owe them to you.

No amount of appreciation can be enough for my brothers, sistersand cousins. In particular, I want to thank Melissa for yourgreat care. You always took it upon yourself to check on me andsend me those loving and caring messages. They made me gothrough the difficult and lonely days.

To my friends Doris Kwesiga, Jane Murungi, Frank Sandmann and SamMurumu thank you for being there for me. A faithful friend is astrong defence. Whoever has found one has found a treasure. Youall are treasures to me.

Finally, I would like to thank God for being in my life, seeingme through the storms of life and never letting me go through the

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storms alone. Without God, nothing would have ever been possiblefor me.

Clare NinsiimaRotterdam, 06 June 2011

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Contents

CHAPTER 1 – Introduction .......................................... 1

CHAPTER 2 – Economic Cooperation Mechanisms in Africa ............. 5

2.1 The role of the African Union in promoting economic growth . . 52.2 African Economic Community (AEC) ............................ 5

2.3 East African Community (EAC) ................................ 72.4 East African Community (EAC) and European Union (EU) compared 82.5 Concluding remarks .......................................... 9

CHAPTER 3 – Jurisdiction rules in the European Union ............. 11

3.1 Legal background of the Brussels Regime .................... 11

3.1.1 Brussels Convention .................................... 113.1.2 Brussels I Regulation .................................. 12

3.1.3 The Lugano Convention .................................. 133.2 Basic Principles of the Brussels Regulation ................ 13

3.3 Material and Temporal Scope of the Regulation .............. 143.3.1 Defendant’s domicile and Alternative grounds of jurisdiction................................................................ 153.3.2 Domicile of legal persons .............................. 16

3.3.3 Alternative jurisdiction ............................... 163.4 Concurrent jurisdiction .................................... 18

3.5 Protective jurisdiction .................................... 183.6 Choice-of-Court Agreements ................................. 20

3.7 Concluding remarks ......................................... 213.7.1 Recognition and enforcement of judgements within the EU 21

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CHAPTER 4 – Economic Integration and Cross-Border Litigation ..... 23

4.1 Common markets and Private International Law ............... 23

4.1.1 Hague Conference on Private International Law and membership of African countries ............................................... 24

4.2 Interaction of legal systems in a Common Market ............ 25

4.3 Existing Legal Framework within the East African Community . 264.4 Clash of jurisdiction rules in East African Common Law and Civil Law oriented States ............................................. 274.5 Main jurisdiction rules under the Civil Procedure Rules of EAC Common Law States ............................................... 294.5.1 Service where defendant is present within jurisdiction of court ......................................................... 304.5.2 Service outside jurisdiction ........................... 31

4.5.3 Submission of foreign defendant ........................ 324.5.4 Summary on the main jurisdiction rules ................. 32

4.6 Need for harmonised civil procedural rules on jurisdiction . 334.6.1 Problem of Exorbitant jurisdiction ..................... 33

4.6.2 Problem of Concurrent jurisdiction ..................... 354.6.3 Application of Discriminatory Rules .................... 36

4.6.3(a) Depositing Security for Cost ........................ 374.6.3(b) Pendency of a suit in a foreign Court ............... 37

4.7 Choice of Court Agreements ................................. 394.7.1 General Remarks ........................................ 39

4.7.2 Conflict between Constitution and Choice of Court Agreements................................................................ 40

4.7.3 Hague Convention of Choice of Court Agreements 2005 .... 414.8 Concluding remarks ......................................... 42

CHAPTER 5 – Conclusion ........................................... 43iv

5.0 Some background remarks .................................... 435.1 Lessons from the European Union Jurisdiction system ........ 44

5.2 Call for reform of existing legal framework ................ 465.2.1 Recommendations ........................................ 46

5.3 Conclusion ................................................. 48

Bibliography ..................................................... 49

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Abbreviations

AEC - African Economic Community

AU - African Union

CACM - The Central American Common Market

COMESA - The Common Market of East and Central Africa

EAC - East African Community

EC - European Community

ECJ - European Court of Justice

EU - European Union

HCCH - Hague Conference on Private International Law

MERCOSUR - The Common Market of the South in Latin America

OAU - Organization of African Union

UNCITRAL - United Nations Commission on International

Trade Law

UNIDRIOT - International Institute for Unification of

Private Law

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CHAPTER 1

Introduction

As a result of the multifaceted process called globalisationthere is a general recognition that the economic welfare ofcitizens of all nations can be substantially enhanced by reducingthe barriers to mutually advantageous exchange by trade andinvestment. One such barrier arises from the complexities ofresolving the disputes that inevitably arise in internationalcommerce.1 This is particularly important as the best practicesfrom the European Union (EU) demonstrate how the removal ofbarriers likely to hinder economic growth can help infacilitating trade. The problem of international litigationbecomes more apparent due to globalisation and the increasinginvolvement in cross-border disputes.2

For the East African Community (EAC) that launched its commonmarket in July 2010, the area of cross-border litigation willbecome very active and there will be a need to make some reformsin the field of judicial cooperation if the common market is tooperate efficiently and effectively. As commerce forges ahead ata lightening pace, procedural rules and dispute resolutionmechanisms that are critical in providing remedies when some ofthe transnational endeavours produce disputes remain national anddifferent in character.3 It would therefore be important for1 Presentation by the Honourable J.J. Sprigelman AC, Chief Justice of New

South Wales on International Commercial litigation. The Asian perspective.At the 20th Biennial Lawasia Conference.

2 Karapetyan Davit V. Abstract. Jurisdiction, recognition and enforcement ofcourt and arbitrate awards. Analysis & recommendation to improve Armenian and Russian Legislation, Vol. 28 (2), Review of Central and East European Law, 2002.

3 Kane, Mary Kay, Globalization and cross border litigation. Global Jurist Topics,Vol. 1 (1), 2001.

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partner states within the EAC to adopt rules that would solve anyproblems created by differences in civil procedure rules. Indeed,it has been observed that “it is an obstacle to close economicrelations if the enforcement of private legal claims is undulycomplicated, time consuming and expensive. A true common marketpresupposes that each national of a member state enjoys the sameprotection and rights in the territory of another member state asthe latter own nationals”.4

The above preposition suggests that partner states in the newlyformed EAC Common Market must establish among themselves a legaland regulatory environment where private transnational exchangescan take place without any hindrances. It follows that as thecommunity moves towards achieving a complete economicintegration, the move will entail the removal of discriminatorynational economic rules and policies under a joint effort bypartner states. This is a difficult matter in integration sinceit involves restrictions on the sovereign rights of countries totake decisions affecting the socio-economic well-being of theirresidents. However, in order to have a successful economicintegration, obstacles to trans-boundary economic activitieswhich occur in the fields of trade, movement of labour, servicesand the flow of capital must be removed.5

Thus, if the EAC is to attract investment and further compete inthe global market, the economic philosophy that underlies thesevisions is neo-liberal economic thinking that emphasises, amongothers, free trade and the removal of obstacles to investment.One of such obstacles are differences in national lawsparticularly in the area of private international law. Private4 Hay, Peter, The Common Market Preliminary Draft Convention on the

Recognition and Enforcement of Judgments - Some consideration on policy and interpretation. American Journal on Comparative Law, Vol. 16 (No. 1/2), 1968.

5 Oppong, Richard F. Relational Issues of Law and Economic Integration in Africa: perspectives from constitutional, public, and private international law, PhD thesis, University of British Columbia, p. 13.

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international law is the body of rules, conventions, model laws,national laws, legal guides, and other documents and instrumentsthat regulate private relationships across national borders.Private international law has a dualistic character – balancinginternational consensus with domestic recognition andimplementation, as well as balancing sovereign actions with thoseof the private sector.6 It provides for rules that will beapplied when determining jurisdiction of courts, recognition andenforcement of foreign judgments, choice of law, services ofdocument and taking of evidence abroad.

The significance of private international law issues hascontributed to the private law of many states as they seek todetermine how their legal system interacts with other legalsystems. The interaction of legal systems means that there is noone system of private international law.7 Each country hasdeveloped its own system and that system differs from the onesin other countries. This in turn can generate conflict of systemsthat has made it necessary for states to harmonise theirprocedural rules for national or regional consistency.8

Procedural rules fall within the ambit of sovereign states andadministrative justice can be achieved if such rules areharmonised to a certain extent since full harmonisation isprobably not necessary and/or difficult to achieve. The role ofprivate international law in facilitating trade can therefore bediscussed from a number of perspectives from choice of law, todetermining international jurisdiction and recognition andenforcement of foreign judgments. Thus, the subject aims atensuring effective protection for cross-border legalrelationships. A properly operative system of private

6 ASIL Guide to electronic resources for International law at http://www.asil.org/pil1.cfm

7 See Hartley T.C., International Commercial Litigation, Cambridge University Press 2009, pp. 4 - 5

8 Ibid. 1

international law facilitates international commerce, which is aprerequisite for development.9

This research aims at showing the relevance of privateinternational law in the newly created EAC Common Market. Itseeks to show why private international law issues are pertinentin an economic integration. Without considering all the aspectsthat fall under private international law, the discussion willonly focus on conflict rules in the field of internationaljurisdiction. The word “jurisdiction” has several meanings likethe territory subject to the control of a particular court or thepower of a government to do something.10 However, in this thesis,international jurisdiction shall imply the competence of a courtwith regard to a particular subject. For instance: whether acourt can have jurisdiction over persons or property situated ina foreign territory. Thus, as the common market takes off, legalsystems will be interconnected and citizens of the EAC willinteract with each through formation of different forms ofeconomic contract. International commercial contracts oftengenerate disputes regarding their validity, existence,interpretation, performance or termination. Because of theirinternational nature, dispute resolution is complicated byvarious factors such as differences in civil procedural rules,language, distance, cultural differences, transaction costs,service of process, multiple jurisdictions, and enforcementproblems among other things.11 9 Morguard Investments v. De Savoye, [1990] 3 S.C.R. 1077-1096, S.C.

Justice La Forest once noted ‘the rules of private international law are grounded in the need in modern times to facilitate the flow of wealth, skills and people across state lines.’ In some instances, a court may haveto decline jurisdiction in favour of another forum if such a decision willbetter serve the cause of justice. Procedurally, the subject provides rules for ensuring that the mere absence of a defendant or relevant evidence from the forum of the litigation does not defeat the cause of justice. Since the rules for the service of documents, and the taking of evidence abroad, are meant to facilitate this.

10 Hartley, supra note 7, at p. 1111 See De Ly, F. and M. Fontaine, Drafting International Contracts. An Analysis of

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It is therefore important for the EAC to have in place a goodlegal system, able to tackle all or most of these problems byproviding inter alia private international law rules (inparticular jurisdiction rules) that are aimed at securing legalrelations between parties transacting across borders.Jurisdiction rules will become pertinent should dealings betweenparties break and the parties need to resort to court to havetheir disputes resolved. In the EAC legal system where such rulesare not harmonised, there is a possibility that certaindifferences in national jurisdiction rules can create barriers tothe proper operation of the common market. Indeed, if the EAC isto fully realise its objectives contained under the common marketprotocol, it should work towards ensuring adequate legalprotection to facilitate the working of the common market; andthis can be obtained through adoption of uniform rules onjurisdiction for settling disputes relating thereto.

By proposing adoption of uniform jurisdiction rules, this thesisseeks to suggest that negative consequences caused by differencesin national jurisdiction rules can indeed be defeated not bydomestic legislation but by a community instrument providing forrules on jurisdiction since national laws and courts have atendency to favour suits before national courts which in turnlead to application of national law.12 Thus as partner states inthe community engage in cross-border trade, judicial cooperationwill be of great importance. It would be relevant to have commonjurisdiction rules that would be applied in cases of trans-borderlitigation. This is significant since adoption of communityjurisdiction rules have proved to be successful in the EU fromwhich the writer intends to make a comparative analysis. Theanalysis will indicate how the EU adopted a community instrument(hereinafter referred to as the Brussels Regulation) to deal with

Contract Clauses. Martinus Nijhoff 2009, Chapter 0 at p.1712 See Tetley W, International Conflict of Laws: Common, Civil, and Maritime, International

Shipping Publications, 1994 at pp. 804 - 805 1

cross-border jurisdiction differences in a bid to maintain anddevelop an area of freedom, security and justice in the internalmarket. The objective was to facilitate trade in the internalmarket as member states realised that a true common market couldnot be adequately achieved if legal protection was not secured.The rules on international jurisdiction were adopted so as toeliminate any differences in national jurisdiction rules thatwere hampering the sound operation of the internal market butalso with the principle objective of ensuring free movement ofJudgments among contracting states.

In this thesis, attention will therefore be paid to theharmonisation of international jurisdiction rules within the EAC.A comparison will be made between the existing legal framework ofEAC states with that of the EU, which adopted a set of uniformrules to tackle aspects of international jurisdiction within theEU internal market. It will draw some good practices from the EUand propose that the EAC learns some lesson from the EUJurisdiction system if it is to facilitate trade within thecommon market. Finally, some recommendations and concludingremarks will be made on the necessity and desirability ofharmonised jurisdiction rules in the EAC common market.

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CHAPTER 2

Economic Cooperation mechanisms in

Africa

2.1 The role of the African Union in promoting economicgrowth

The African Union is a replacement of the Organization of AfricanUnity (OAU). OAU was established on 25th May 1963 in Addis Abababy adopting the OAU Charter by 32 heads of States andGovernments.13 Today, the African Union is composed of 53 MemberStates.14 The main objectives of the OAU at its establishment (andwhich are still the objectives of the African Union) are, interalia, to rid the continent of the remaining vestiges ofcolonisation and apartheid, to promote unity and solidarity amongAfrican States, to coordinate and intensify cooperation fordevelopment, to safeguard the sovereignty and territorialintegrity of Member States, and to promote internationalcooperation within the framework of the United Nations.15 The OAUCharter was later amended to adapt to the challenges of thechanging world. On 9th September 1999, the Heads of State andGovernment of the OAU issued a Declaration (the SirteDeclaration) calling for the establishments of an African Union,with a view, inter alia, to accelerating the process ofintegration on the continent, carry on the ultimate objectives ofthe OAU and provisions of the Treaty establishing the African

13 See Preamble OAU Charter 196314 See African Union, African Union in a nutshell, at: http://www.africa-

union.org/root/au/AboutAu/au_in_a_nutshell_en.htm15 Ibid.

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Economic Community.16 The African Union was thereafter launched on9th July 2002 as a successor of the OAU.17

2.2 African Economic Community (AEC)

Long before the establishment of the OAU, African leaders hadrecognised that cooperation and integration among Africancountries in the economic, social and cultural fields wasnecessary to accelerate transformation and sustainabledevelopment on the African continent. This formed one of themajor objectives of the OAU Charter.18 In 1980, the OAUExtraordinary Summit19 adopted the Lagos Plan of Action, as amajor step towards that goal. During that Summit, the Africanleaders stated their commitment, individually and collectively,to promote the economic integration of Africa, in order tofacilitate and reinforce social and economic intercourse. Theyalso committed themselves to promote the economic and socialdevelopment and integration of their economies and, to that end,to establish national, regional and sub-regional blocs leadingto a dynamic and interdependent African economy; thus paving theway for the eventual establishment of the African EconomicCommunity.20

In June 1991, the OAU Heads of State and Government signed theTreaty establishing the African Economic Community. The AEC

16 Ibid. 17 Ibid., at Advent of the AU18 Charter that established the Organization of the African Union. It was

signed in Addis Ababa on 25th May 1963 by 32 African Member States.19 Department of International Relations and Cooperation, Republic of South

Africa, African Economic Community, http://www.dfa.gov.za/foreign/Multilateral/africa/aec.htm

20 African Economic Community Established under the African Economic Community Treaty to meet the economic objectives of the OAU/African Union

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Treaty (popularly known as the Abuja Treaty)21 came into force inMay 1994 when the required numbers of instruments ofratification for its coming into force were deposited with theSecretary General of the OAU/AEC.

The major characteristic of the AEC is that it is beingestablished in six stages in accordance with Article 6 of theAbuja Treaty.22 Article 8823 of the treaty further provides thatthe community shall be established through coordination,harmonisation and progressive integration of the activities ofRegional Economic Communities (RECs). The RECs (also known asregional blocs) were formed with the sole purpose of allowingfree trade areas, formation customs unions, a single market, acentral bank, and a common currency.

So far, the AEC has established direct working relations withthe Economic Community of West African States (ECOWAS) in theWest African region, the Economic Community of Central AfricanStates (ECCAS) in the Central region, and in the East andSouthern region, the Common Market for East and Southern Africa(COMESA), and the East African Community (EAC) of East Africa.In the Southern Region, the AEC has been dealing with theSouthern African Development Community (SADC). In North Africa,there is the Arab Maghreb Union (UMA). There are other groupingslike the Economic and Monetary Union of West Africa (UEMOA) andthe Customs and Economic Union of Central Africa (UDEAC) – allof which are engaged in the promotion of integration.24

21 African Economics Treaty signed in Abuja by 51 Member States of the African Union to promote Economic development on the African Continent.

22 Article 6 provides for modalities of the establishment of the Community. It provides inter alia that the community shall be established gradually in six stages of variable duration of over a transnational period not exceeding 34 years.

23 Article 88, provides for relationship between the community and regional economic blocs.

24 Regional blocs that have been formed under the umbrella of the African Economic Community.

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2.3 East African Community (EAC)

The EAC is an inter-governmental organisation comprising of fivePartner States of Burundi, Kenya, Rwanda, Tanzania and Uganda.The original members of the community were Kenya, Uganda andTanzania who became Partner States in 1967, following the signingof the first Treaty of East African Cooperation which establishedthe EAC in 1967. The community collapsed in 1977 due to lack ofpolitical will, lack of strong participation by the privatesector and civil society, coupled with differences in the sharingof benefits from jointly owned common services organisations andthe lack of policy to redress the situation. The EAC was revivedin 1993 following the establishment of Permanent TripartiteCommission for East African Cooperation. On 30th November 1999,the Treaty establishing the EAC was signed and it entered intoforce on 1st July 2000; following its ratification by the originalthree Partner States. The EAC Treaty was amended on 14th December2006 and 20th August 2007 after Rwanda and Burundi became PartnerStates.25

The EAC is one of the trade blocs formed under the auspices ofthe African Economics Community. The objectives of the EAC arestipulated under Article 5 of the East African Treaty.26 Pursuantto Articles 2(2)27 and 5 of the Treaty, Partner States agreed,inter alia, to establish among themselves a Common Market aimedat accelerating economic growth and development – through theattainment of free movement of goods, persons, labour, servicesand capital. On 1 July 2010, the Protocol on the establishment ofthe EAC Common Market was launched and the objectives containedin the Protocol will be implemented progressively.

The EAC mission is to widen and deepen economic, political,

25 The above can be found in the preamble of the EAC Amended treaty. 26 Ibid., Article 5 27 EAC Treaty, at Article 2(2)

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social and cultural integration in order to improve the qualityof life of the people of East Africa through increasedcompetitiveness, value added production, trade and investment.28

The best way to achieve this mission was to form a Common Marketamongst partner states and take advantages of the history ofcooperation, geographical location and the network ofinfrastructure. With examples of successful common markets inEurope, the Common Market of the South (MERCOSUR) in LatinAmerica, the Central American Common Market (CACM), the CommonMarket of East and Central Africa (COMESA),29 the EAC hopes torealise economic development by allowing free movement of factorsof productions.

2.4East African Community (EAC) and European Union (EU)compared

In order to attain all its objectives, Article 12630 of the EACTreaty makes express provision for the unification andharmonisation of laws of the partner states; includingstandardisation of the judgments of Courts within the community.In the field of private international law, no rules have beenmade in order to secure parties from the consequences ofdifferences in national civil procedural rules (particularly therules on international jurisdiction). The existing legalframework indicates that if partner states were to apply theirconflict rules, there would still be a conflict of law as theexisting rules still differ; especially those of the common lawand civil law orientated states. Even in common law states, therecan be some barriers likely to affect legal rights of partieswith the EAC. These barriers will be discussed in detail underChapter 4.

28 Supra, note 25 29 Examples of Common markets that have been formed around the world. 30 Supra, note 27 at Article 126

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The EAC system can be compared with that of the EU. Whereas theEAC does not have harmonised jurisdiction rules, the EU adoptedsuch rules in 1968 when member states concluded the BrusselsConvention31 on jurisdiction, recognition and the enforcement ofjudgments in civil and commercial matters. According to thepreamble of the convention, it was intended to facilitate thereciprocal recognition and enforcement of judgments of courts ortribunals, and strengthen in the community the protection ofpersons therein established. At first, Article 29332 (formerly220) of the EC treaty merely required member states to simplifythe formalities governing the recognition and enforcement ofjudgments within the EC. This could have been done by theadoption of a traditional judgments recognition convention basedon the principle of indirect jurisdiction – which would not bebinding on courts. The rules would only come into play ifrecognition of judgment is sought and the court asked torecognise a judgment; it has to determine whether the court oforigin had jurisdiction under the rules of the convention.

Member states of the then EC did not adopt this system. Instead,they adopted the Brussels Convention based on the principle of“direct jurisdiction” where the court which originally grants ajudgment is required to comply with the jurisdiction rules of theconvention. It must do so even if there is no need to recognisethat judgment in another member state. However, if such ajudgment is to be recognised in another member state, the courtasked to recognise is generally not allowed to ask whether thecourt of origin had jurisdiction. This system carries forward theBrussels Regulation33 and the advantage is that it contains fairly

31 The Brussels Convention was the first general multilateral instrument on recognition of judgments which regulated the jurisdiction of courts of contracting states.

32 Article 293 EU Treaty. 33 Brussels Regulation 44/2001 The Brussels I Regulation replaced the

Brussels Convention. It came into force on 1 March 2002 and applies to allMember States of the European Union with the exception of Denmark, which

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restrictive rules on which courts can determine their competenceand also protects defendants from exorbitant jurisdiction.Further, the economic impact contained in these rules is thatthey help in eliminating costs and delays associated withdetermining jurisdiction. In order to ensure that administrationof justice is secured, the EU ensured that the adoption ofuniform rules was accompanied with procedural safeguards whichwould allow that a judgment given in breach of some jurisdictionrules contained in the community legislation would not berecognised and enforced.34

2.5Concluding remarks

The main importance of this comparison is to show that the EUrealised that a true internal market could be achieved ifadequate legal protection is secured. This is a principle that isoften raised by the ECJ35 to emphasise that legal cooperation isimportant if a true common market is to operate successfully. Inthe Owusu Case for example,36 the ECJ noted that the purpose ofArticle 220 of the EC Treaty – on the basis of which memberstates concluded the Brussels Convention – was to facilitate theworking of the common market through the adoption of rules ofjurisdiction for disputes relating thereto; and through the

does not participate in measures adopted under Title IV of the Treaty establishing the European Community. In 2007 Denmark concluded a separate agreement with the European Community, the effect of which is to extend the Regulation’s rules to Denmark.

34 See Fourth Indent of Article 293 European Community Treaty35 European Court of Justice was established in 1952. Its role is to make

sure that the EU legislation is interpreted and applied in the same way inall EU countries, so that the law is equal for everyone. It ensures, for example, that national courts do not give different rulings on the same issue.

36 Andrew Owusu V Jackson ECJ 1March 2005, C- 281/02, ECR 1-1383 paragraphs 31- 36

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elimination of, as far as is possible, difficulties concerningthe recognition and enforcement of judgments in the territory ofcontracting states. Further, that the Convention was adopted toensure the smooth working of the common market. It is from thesuccessful implementation of the Brussels Convention (nowRegulation) that has enabled the EU to cooperate judicially incivil and commercial matters; thereby facilitating trade in theUnion internal market. From a small beginning of six States, theEU has grown to a continent-wide organisation with 27 memberstates. In 2010, the EU generated an estimated 26% (US$ 16.282trillion) of the global economy, or 20% (US$ 15.170 trillion) –making it the world's second largest economic power after theUnited States of America.37

In view of the above, it is therefore relevant for the EAC toimplement community rules by harmonising the existingjurisdiction rules. The rules would help in facilitating trade byremoving all or some legal barriers likely to hamper the soundoperation of the common market. Protection of private legalrights is imperative since it helps in administering justice inan efficient and rapid way. The EAC needs to realise thateconomic growth can be fostered by a good legal system thatcontains good dispute procedural rules that are clear, efficient,predictable and certain.

37 World Economic Outlook Database, April 2010 edition. International Monetary Fund.

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CHAPTER 3

Jurisdiction Rules in the European

Union (EU)

The EU is composed of 27 member states. All the member stateshave different rules of jurisdiction that determine thedistribution of competence among the courts on their territory.However, if a court case has an international dimension andinvolves, for example, parties domiciled in different memberstates, the rules that determine jurisdiction of courts are laiddown in the European Regulation 44/2001 (also referred to as theBrussels Regulation).38 The Brussels Regulation is a re-enactmentof the Brussels Convention.39 The scope of the rules of theBrussels Regulation was extended to the Lugano Convention, whichis applied by Lugano states. The Brussels Convention, BrusselsRegulation and the Lugano Convention form a set of instrumentsoften referred to us the “Brussels Regime”.

All three legal instruments are broadly similar in content, withsome differences. In general, it is the domicile of the defendantthat determines which of these instruments applies in a givencase. The Brussels I Regulation is applicable where the defendantis domiciled in a member state of the European Union and itsapplication is also extended to Denmark.40 The Lugano Conventionis applicable when the defendant is domiciled in Iceland, Norwayor Switzerland. Where the recognition or enforcement of a foreignjudgment is concerned, the applicable instrument is determined in

38 Supra, note 3339 Hartley 2009, p. 1940 Ibid.

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analogous fashion by the country of origin of the judgment. Thisdemonstrates that uniform jurisdiction rules are applied in 30European states solely for purposes of eliminating nationaljurisdiction differences in a bid to facilitate trade between thesaid contracting states. In any reference made to the BrusselsRegulation, the corresponding provisions of the Brussels andLugano Conventions will be implied.

3.1 Legal background of the Brussels Regime

3.1.1 Brussels Convention

The Brussels Convention on jurisdiction and the enforcement ofjudgments in civil and commercial matters (“the BrusselsConvention”) was agreed on 27 September 1968 by the then sixMember States of the European Economic Community. It sought toavoid parallel legal proceedings within the Community, tosimplify the recognition and enforcement of judgments, and tostrengthen the legal protection afforded to citizens of theMember States. It included detailed rules dealing with thecircumstances under which the courts in the Member States mightexercise jurisdiction; and rules addressing specific civil andcommercial legal areas (including contract, tort andmaintenance). It was amended and extended on subsequent occasionsfollowing the accession of the United Kingdom and other states tothe European Community. Effect was given to the Convention in theUnited Kingdom by the Civil Jurisdiction and Judgments Act 1982,which came fully into force on 1 January 1987.41

41 Green Paper report on the Brussels 1 regulation. 21st report of session 2008 - 09

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3.1.2 Brussels I Regulation

The Brussels I Regulation replaced the Brussels Convention. Itcame into force on 1 March 2002 and applies to all Member Statesof the European Union with the exception of Denmark, which doesnot participate in measures adopted under Title IV of the Treatyestablishing the European Community.42 Denmark concluded aseparate agreement with the European Community,43 the effect ofwhich is to extend the Regulation’s rules to Denmark. TheRegulation lays down uniform rules to settle conflicts ofjurisdiction and facilitate the mutual recognition andenforcement of judgments, court settlements and authenticinstruments within the EU in civil and commercial matters. Italso includes rules to assist courts in settling jurisdictionalmatters. The preamble to the Regulation states many of its policyaims and objectives. It is designed to contribute to thecontinued development of an area of freedom, security and justiceand to the “sound operation of the internal market”. The regimeaims at facilitating the mutual recognition of judgments in civiland commercial matters through a system of highly predictablejurisdictional rules which are generally based on the defendant’sdomicile. The regime established by the Regulation is foundedupon a principle of “mutual trust between Member States in theadministration of justice” in each others jurisdictions.44

3.1.3 The Lugano Convention

42 Protocol on the position of Denmark43 Agreement reached between European Community and Denmark on 19 October

2005, OJ L299 (16 November 2005); approved by Council Decision on 27 April2006, OJ L94 (4 April 2006); entered into force on 1 July 2007, OJ L94 (4April 2007).

44 Supra, note 39 1

The scope of the Brussels regime was also extended by the LuganoConvention, concluded on 16 September 1988 between the then 12Member States of the Community and the then six Member States ofthe European Free Trade Association. The Lugano Convention coversthe same subject matters as the Brussels Convention, now theBrussels I Regulation. Its effect is to create common rulesregarding jurisdiction and judgments across a single legal spaceconsisting of the Member States, including Denmark45 and the threeEuropean Free Trade Association states of Iceland, Norway andSwitzerland. Liechtenstein, which joined the European Free TradeAssociation in 1991, is not party to the Lugano Convention.

3.2 Basic Principles of the Brussels Regulation

“The Brussels Convention is based on the trust which thecontracting states accord to each others legal system andjudicial institutions. It is from that mutual trust whichhas enabled a compulsory systems of jurisdiction to beestablished, which all courts within the purview of theconvention are required to respect and as a corollary thewaiver of those states of the right to apply their internalrules on recognition and enforcement of foreign judgments infavour of simplified mechanisms for the recognition andenforcement of judgments. It is also common ground that theconvention thereby seeks to ensure legal certainty by

45 Even after the Brussels Regulation entered into force, questions ofjurisdiction between Denmark and the other EU countries continued to begoverned by the Brussels Convention of 1968. This Danish opt-out was basedon the 1997 Protocol No 5 on the position of Denmark annexed to theTreaties (now Protocol No 22). On 19 October 2005, the EU concluded anagreement with Denmark on jurisdiction and the recognition and enforcementof judgments in civil and commercial matters that extended the provisionsof the regulation to that country. On 27 April 2006, the agreement wasapproved on behalf of the EU by Council Decision 2006/325/EC. It enteredinto force on 1 July 2007.

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allowing individuals to foresee with sufficient certaintywhich courts will have jurisdiction” (Quotation by ECJ inthe Erich Gasser case).46

The above emulates the spirit under which the Brussels Conventionwas formulated. The same is also covered under the recitals tothe Brussels Regulation. The recitals help in interpreting themember states commitment towards each other in the event ofdispute. The obligation of member states of the EU when applyingthe rules contained in the Regulation is to avoid applyingnational rules that would lead to irreconcilable judgments.47 Theobjective is therefore to ensure adequate distribution ofjurisdiction and efficient recognition and enforcement ofjudgment amongst contracting states.48 The rules are formulated soas to maintain and develop an area of freedom, security andjustice in which free movement of persons is ensured.49 This is tobe achieved by avoiding multiplication of competent forum,elimination of exorbitant jurisdiction rules, and securing legalcertainty and predictability.50 Thus, the rules allow a plaintiffto easily identify a court before which he may start proceedings;on the other hand, a defendant can reasonably foresee the courtbefore which he may be sued. The rules also have a unique featureof protection for weaker persons in the EU.51 Another majorobjective was to facilitate administration of justice by allowingfor automatic recognition of judgments from one member state toanother and simplifying procedure on enforcement – so that theyare efficient and rapid.52

46 European Community Gasser V MISRAT Court of justice of the European Communities. Case C- 116/02 [ 2003] ECR 1 – 14693, paragraph 72

47 See Recital 15 Brussels Regulation48 See Recitals 8 to 15 Brussels Regulation49 See Recital 1 Brussels Regulation50 See Recital 11 Brussels Regulation51 See Recital 13 Brussels Regulation52 See Recital 17 Brussels Regulation

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In the Owusu Case,53 the court noted that, the purpose of Article22054 of the EC Treaty (the basis on which member states concludedthe Brussels Convention) is to facilitate the working of thecommon market through the adoption of rules of jurisdiction fordisputes relating thereto; and through the elimination of, as faras is possible, difficulties concerning the recognition andenforcement of judgments in the territory of contracting states.Further, the convention was adopted to ensure the smooth workingof the common market. This is what is contained in the preambleof the Regulation and it forms the material and temporal scope ofthe instrument.

3.3 Material and Temporal scope of the Regulation

The material scope of the Regulation is defined under Article1(1) and (2). Pursuant to Article 1 (1), the Regulation appliesin civil and commercial matters (whatever the nature of the courtor tribunal), but does not extend to revenue, customs oradministrative matters nor does it apply to, inter alia, thestatus or legal capacity of natural persons, right to propertyarising out of a matrimonial relationship, wills and succession,bankruptcy, and arbitration.55 It also applies to legalproceedings instituted, to documents formally drawn up andregistered as authentic instruments after its entry into force on1 March 2002.56 For matters that fall within the scope of theRegulation, the Regulation provides for a system of direct53 Andrew Owusu V Jackson ECJ 1March 2005, C- 281/02, ECR 1-1383 paragraphs

31- 36 54 Article 220 EC Treaty55 See Article 1(1) and (2) of the Brussels Regulation for matters that fall

within its material scope.56 Article 66 Article 66(2) goes further to specify two situations in which

the Regulation applies. That is, to proceedings instituted in a member state before that date, judgements given thereafter will be recognized andenforced in accordance with the Regulation

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jurisdiction just like its predecessor the Brussels Convention.It lays down the general rule under which jurisdiction can befounded,57 a number of special grounds as alternatives to thegeneral ground,58 rules on protective jurisdiction which introducespecial rules safeguarding weaker parties,59 rules on prorogationon jurisdiction by the parties,60 and lastly rules on exclusivejurisdiction.61

3.3.1 Defendant's domicile and alternative grounds of jurisdiction

The general rule is that jurisdiction lies with the courts of themember state of the defendant's domicile.62 Persons domiciled in amember state are sued in the courts of that state whatever theirnationality. Persons who are not nationals of the state in whichthey are domiciled are governed by the rules of jurisdictionapplicable to nationals of that state; while the defendant'sdomicile in a member state may determine that jurisdiction lieswith that state's courts. There are two important heads ofjurisdiction which may be applied to override the main rulesbased on a defendant’s domicile. First, under Article 22,63 whichprovides for “exclusive jurisdiction” in certain aspects likedisputes relating to real property or proceedings concerning thevalidity or dissolution of companies or associations which havetheir seat in a member state? Jurisdiction is given to the courtsof the member state where that property is situated or to thecourts in the member state in which the company or associationhas its seat. Secondly, Article 23 also provides for “Prorogation

57 Article 2 Brussels Regulation58 Articles 5 - 7 Brussels Regulation59 Article 8 - 21 Brussels Regulation60 Article 23 Brussels Regulation61 Article 22 Brussels Regulation 62 Supra, note 5763 Supra, note 61

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of jurisdiction”, meaning “choice of court”.64 Thus where partieshave chosen a court by agreement in their contract to decide anydisputes arising between them, and the chosen court is in aspecific member state, then, if one or more of the parties to theproceedings is also domiciled in any member state, the courts ofthe chosen state shall have exclusive jurisdiction over thedispute. Details of choice of court agreements will be discussedlater in this chapter.

It follows that the general rule and the exceptions to it areapplied to deter courts from exercising exorbitant jurisdiction,avoid multiplication of competent forums, and ensure legalcertainty is maintained within the European market. The majorobjective of the Regulation is to create a link betweenproceedings to which the Regulation applies and the territory ofmember states bound by the Regulation.65 Since litigants and courtwaste time on determining jurisdiction in circumstance where aparticular court has exercised excessive jurisdiction which inany case may be exercised validly under a country's rules, butmay nonetheless be unfair to the defendant because of a lack ofsignificant connection between the sovereign and either theparties or the dispute. The EU adopted this direct rule onjurisdiction and it has helped in eliminating some of thenegative consequences associated with jurisdiction which I intendto discuss in the next chapter.

3.3.2 Domicile of Legal Persons

It should be noted that the rules contained in the Regulation do

64 Supra, note 6065 See Recital 8

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not define domicile; it was left to be determined by the nationallaw of the court seized. However, a uniform definition of thedomicile of companies or other legal persons is given in theRegulation. Thus, if the defendant is a natural person, the courtof the member state seized of the matter determines whether ornot he is domiciled there by applying its domestic law. If thecourt establishes that he is not domiciled in that state, then –in order to determine whether the defendant is domiciled inanother member state – the court applies the law of that memberstate.66 If the defendant is a company or other legal person,Article 60 lays down that for the purposes of the Regulation, acompany is domiciled at the place where it has its statutoryseat, or central administration or its principal place ofbusiness.67

3.3.3 Alternative Jurisdiction

As an alternative to the general rule that jurisdiction lies withthe courts of the member state of the defendant's domicile,plaintiffs may avail themselves of the special jurisdictionspecified in Articles 5 to 7, basing on connecting link betweenthe court and the action or to facilitate sound operation ofjustice.68 This form of jurisdiction covers matters relating to

66 See Article 59 Brussels Regulation and supra, note 5767 Ibid., Article 60. The grounds of jurisdiction specified in Article 60, is

modelled on Article 48 of the EC Treaty. It provides two alternatives. Firstly, that the plaintiff has several alternative forums available as regards the territorial application of the regulation, and, secondly, that, if any one of those grounds is present in a Member State, the regulation is applicable, even though the other grounds would determine that the company was domiciled in a third State. This rule is useful less as a tool for settling issues of concurrent jurisdiction than as a means of ensuring that companies with at least one link with the territory of the European Union are brought within the scope of the regulation's uniform rules.

68 Articles 5 - 7 and Recital 11 - 13 1

contract, maintenance, tort, civil claims for damages orrestitution based on an act giving rise to criminal proceedings,disputes arising out of the operations of a branch or agency,trusts, and certain shipping disputes. Under the BrusselsConvention, this rule provided that in matters relating tocontract a person may be sued in the courts for the place ofperformance of the obligation in question.69 This provision raisedvarious problems of interpretation regarding (a) the definitionof 'matters relating to contract', Handte V TMCS Case,70 (b) theidentification of the contractual obligation to be taken intoconsideration for the purposes of jurisdiction, and (c) thedetermination of the place of performance; Tessli V Dunlop.71

Since one of the objective of the Regulation is to avoid in allpossible ways any interpretation of the rules that would lead touncertainty, multiplication of forums, or application of nationalrules that would lead to different results and or irreconcilablejudgments, Article 5(1) – which had caused a lot of problems –was amended and the revised rules were incorporated in theRegulation. The revised rules aim at providing clear rules onjurisdiction. I will not deal with all matters covered underArticle 5, but for purposes of illustrating how certain problemslike concurrent jurisdiction were dealt with, I will use the ruledealing with contracts for sale of goods and provision ofservices to describe how some mischiefs created under Article 5were resolved. In such contracts, obligation in question wouldmean several things from delivery to payment and the places forcarrying out the two obligations can be in different memberstates. Thus to avoid this, it was agreed that when dealing withcontracts for sale of goods or provision of services, the courts

69 Article 5(1)(a) 70 European Community Handte V TMCS Court of Justice of the European

Communities Case C- 26/91 [1992] ECR 1 - 396771 European Community Tessili V Dunlop Court of Justice of the European

Communities Case C- 12/76 [1976] ECR 14731

having jurisdiction are those for the place of delivery of goodsor the performance of service – even if the actual claim concernssomething else like payment.72 The whole point here is to ensurecertainty, and deal with related actions so that they could beheard by one court. It was seen as expedient to hear anddetermine closely related actions together to avoid the risk ofirreconcilable judgments resulting from separate proceedings.

3.4 Concurrent Jurisdiction

We can see that the rules contained under Articles 5 - 7establish alternative forums. This means that proceedings on thesame claim can be brought and conducted concurrently in courts indifferent member states, with the risk that those courts arriveat mutually incompatible judgments. To deal with this problem,the Regulation provides that where proceedings involving the samecause of action between the same parties are brought in thecourts of different member states, any court other than the courtfirst seized must stay its proceedings until such time as thejurisdiction of the court first seized is established.73 Theserules, known as the rules on lis pendens (Latin for “dispute elsewherepending)” in different member states, were developed to address thesituation where cases covering the same litigants and the samefacts are brought in two different member states. The provisionsaim to avoid such parallel proceedings and to minimise the riskof incompatible judgments on the same facts from differingjurisdictions. Although the rule has not totally eliminated thepossibility of concurrent jurisdiction, it can be said to have

72 Article 5 (1) b 73 See Article 27 (1) to 31 Brussels Regulation and Overseas Union V New

Hampshire ECJ 27 June 1991, C- 351/89, ECR 1- 33171

removed some aspects that would lead to two courts havingjurisdiction.

For instance in the Gubisch V Palumbo case,74 the ECJ held thatthe concept of the lis pendens rule covers a case where a partybrings an action before court for the rescission of or dischargeof an international sales contract – whilst an action by theother party to enforce the same contract is pending before acourt in another contracting state. What is important is that theparties are the same75 and the action relates to the sameproceedings. Consequently, in order to ensure that only one courthas jurisdiction, the court second seized is required to stayproceedings or decline jurisdiction in favour of the court firstseized. When discussing choice of court agreements later in thischapter, I will discuss how the lis pendens rule is further appliedin order to avoid concurrent jurisdiction.

3.5 Protective Jurisdiction

Another interesting future with the Brussels rules is that itcontains protective provisions for weaker parties. The Regulationaccords the weaker party judicial protection by ensuring thatproceedings are preferably conducted in courts readily accessibleto the weaker party. The matters concerned are insurancecontracts, consumer contracts, and individual employmentcontracts. When dealing with weaker parties, the rules that wouldapply are provided for under Articles 8 - 21 and they advocatefor the jurisdiction of the court of the member state where theweaker party is domiciled.76 For consumer and insurancescontracts, the principles that apply are the same. However, these

74 See Gubisch V Palumbo ECL, 8 December 1987, Case 144/86, ECR 486175 See the Tatry Case C- 406/92 [1994] ECR 1 543976 See Recital 13 and Articles 8 - 21

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rules that apply in employment contracts, which were notoriginally contained in the Brussels Convention but where adoptedin the Brussels Regulation, provide for detailed rules onemployment contracts. The rules have different applicationsdepending on whether the employer is suing the employee or theemployee is suing the employer. The latter clearly demonstratesthe Regulation's objective in favouring and/or protecting theemployee.77

For instance: when the employer is suing the employee, he may doso only in the courts of the member state where the employee isdomiciled.78 However, if the employee is suing the employer, hehas two options. He can sue the employer in the courts of themember state in which the employer is domiciled; alternatively,he may sue in the courts for the place where he habituallycarries out his work, or in the courts where he did so, or if theemployee does not habitually carry out his work in any onecountry, in the courts for the place where the business engageshim is or was situated.79 The Regulation goes on to determine thatan employer who is not domiciled in any member state, but has abranch, agency or any other permanent establishment in one of themember states, he is deemed to be domiciled in that member state.

The above rules demonstrate that the weaker party should beprotected by rules on jurisdiction more favourable to hisinterest than the general rule. The general rule when appliedwould create an economic imbalance; in order to eliminate that,the protective rules give all parties an equal opportunity tojustice. Assume an employee domiciled in Netherlands moving tosue his employer, a big company domiciled in France or Italy.This would most likely create an economic obstacle to the weakerparty. To avoid that, we can see that the rules allow the weaker

77 See Hartley 2009, p. 68 78 See Article 20(1) Brussels Regulation79 See Articles 18, 19 Brussels Regulation

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party to being a claim in the courts that are more convenient andless expensive for him to access. Secondly, the protective rulelimits the application of choice-of-court agreements since theyare deemed to have no legal force if they are contrary to theprovisions in the Brussels Regulation on insurance, consumer, oremployment contracts.80 The conclusion would be that theprotective rules give special protection to parties regarded aseconomically weak.

3.6 Choice of Court Agreements

Subject to the rules on exclusive jurisdiction, the Regulationallows the parties extensive scope to decide for themselves oninternational jurisdiction. The Regulation mandates courts togive effect to forum clauses provided one or more of the partiesis from the EU, and the court(s) chosen is in the EU. The choice-of-court agreement to be effective must certify the formalrequirements stipulated under the Article 23. That is that theagreement must be writing or evidenced in writing, or it must bein accordance with the practice between parties or in accordancewith international trade or commerce usage that parties are orought to be aware of. Once the formal requirements have beencertified, the Regulation will then apply to disputes that havearisen, and to those that may arise in the future, which areconnected with a particular legal relation. If the parties havenot agreed otherwise, the choice-of-court agreement will bepresumed to be exclusive.

To avoid any misinterpretation of the rule or situations where aparty may start proceedings in another court other than thechosen court, the ECJ has made some rulings that would create

80 See Article 23(5) Brussels Regulation1

certainty when applying the rules on choice-of-court agreements.For instance, the ECJ has ruled that oral contracts on choice ofcourt agreements are valid if they are backed by the formalrequirements set out under Article 23.81 Secondly, in a situationwhere a court seized with a claim is not a court chosen by theparties in a choice-of-court agreement, such a court is under anobligation to apply the lis pendens rule as a way of obviatingconflicting decisions. The forum chosen by the parties must alsostay its proceedings in the event that the same proceedings,involving the same cause of action and between the same partieswere earlier brought in the courts of another member state. Ittherefore follows that the court first seized must determine itscompetence before the chosen court assumes jurisdiction.82

It has been observed that the lis pendens rule is capable of beingused or abused to frustrate or undermine a choice of courtagreement using a tactic commonly known as the “torpedo”.83 Theefficacy of this tactic has been pointed out and the EUcommission is working towards finding a clean and effectivesolution so as to avoid Erich Gasser situations.84 In that case,Gasser brought an action against MISAT before the Landesgericht(Regional Court) Feldkirch, Austria, to obtain payment ofoutstanding invoices. In support of the jurisdiction of thatcourt, the claimant submitted that it was not only the court forthe place of performance of the contract, within the meaning ofArticle 5(1) of the Convention, but was also the court designatedby a choice-of-court clause that had appeared on all invoicessent by Gasser to MISAT, without the latter having raised anyobjection in that regard. According to Gasser, that showed that,

81 See MSG V Les Gravieres Rhenanes ECJ 20 February 1997, C 106/95, ECR 1 -911

82 Supra, Erich Gasser case 83 See remarks by Professor Mario Franzosi “Worldwide Patent Litigation and

the Italian Torpedo” [1997] 7 EIPR, p. 38 84 Green Paper report on the Brussels 1 regulation. 21st report of session

2008 - 09 1

in accordance with their practice and the usage prevailing intrade between Austria and Italy, the parties had concluded anagreement conferring jurisdiction within the meaning of Article17 of the Brussels Convention.

MISAT contended that the Landesgericht Feldkirch had nojurisdiction, on the ground that the court of competentjurisdiction was the court for the place where it wasestablished, under the general rule laid down in Article 2 of theBrussels Convention. It also contested the very existence of anagreement conferring jurisdiction and stated that, before theaction was brought by Gasser before the Landesgericht Feldkirch,it had commenced proceedings before the Tribunale Civile e Penaledi Roma in respect of the same business relationship.

3.7 Concluding remarks

The above discussion illustrates how the issue of legalprotection is strictly applied in the EU. The rules of theRegulation cannot be derogated from by contracting states andthey aim at removing any differences between national rulesgoverning jurisdiction. They ensure that there is a link betweenthe proceedings to which the regulation applies and the territoryof the member state bound by it. In principle, they apply whenthe defendant is domiciled in one of the contracting states. Fordefendants not domiciled in the contracting state, they aregoverned by national rules of that state. To ensure legalcertainty, the rules are highly predictable and any alternativegrounds of jurisdiction are based on the close link between thecourt and the cause of action. The rules further protect weakerparties so that the court which has jurisdiction is morefavourable to their interests. They also avoid concurrentjurisdiction by applying the lis pendens rule so that jurisdiction

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is confined to one court. All this is done to ensure that once ajudgment has been given in a member state, it is automaticallyrecognised in another member state without the need for anyprocedure.

3.7.1 Recognition and enforcement of judgments within the EU

It should however be recalled that the principle objective of theRegulation was to require member states to simplify theformalities governing the recognition judgments with the viewthat the procedure for enforcement of judgments was efficient andrapid. In order to attain this objective of free movement ofjudgments in civil and commercial matters, it was necessary andappropriate that the rules governing jurisdiction, recognitionand enforcement of judgments be governed by the same communityinstrument – which was binding and directly applicable. The onlydifference between the rules on jurisdiction and the rules onrecognition and enforcement is that whereas the jurisdictionrules apply, in general when the defendant is domiciled in amember state, the rules on recognition and enforcement apply toall judgments from other member states even when the defendant isnot domiciled in that member state. What is important is that therules were formulated to complement each other because of theindirect link between jurisdiction, recognition and enforcement.It is to this end that the Brussels Regulation is referred to asa double instrument which is to-date applicable in 30 EuropeanStates.

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CHAPTER 4

Economic Integration and Cross-Border

Litigation

4.1 Common markets and Private International Law

In the modern world, every country having a developed legalsystem has its own set of conflict rules, which form part of itsprivate law that helps in settling disputes between persons; bothlegal and natural. Such rules become relevant when courts have toresolve disputes affecting facts, events, persons, property ortransactions that are closely connected with a foreign system.85

Cross-border disputes are most frequent in a setting that allowsfor the growth of international relationships, be they commercialor personal. Economic integration provides such a setting sinceit allows for the free movement of persons, goods, services, andcapital across national boundaries. The facilitation of factormobility resulting from economic integration and the concomitantgrowth in international relationships results in problems whichcall for resolution using the tools of private international law.An economic community cannot function solely on the basis ofeconomic rules; attention must also be paid to the rules forsettling cross-border disputes.86 Consequently, considerableattention is given to the subject since economic communities mustdevelop an area where private transnational exchanges can takeplace without any hindrances.

85 Stone, Peter, EU Private International Law: Harmonization of Laws, Edward Elgar, 2006,pp. 3- 4

86 See Oppong on The Hague Conference and the Development of Private International law in Africa. A Plea for Cooperation, p. 3; and Oppong on Relational Issues of Law and Economic Integration in Africa, pp. 12- 14

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This explains why regional economic communities like the EU hadto adopt conflict rules or private international law rules, whichhad in themselves an objective of maintaining and developing anarea of freedom, security and justice in which the free movementof goods, services, labour and capital could be secured. In orderto establish such an area, the EU adopted rules aimed atachieving legal security by way of certainty, predictability anduniformity of results for persons involved. Like any other rulesof a country's private law, partner states of the EAC need toharmonise their conflict rules by means of international treatyor community instrument.87 Article 126 of the Treaty of the EACwould allow for such regulatory reforms to take place since theArticle enjoins member states to ‘encourage the standardisationof judgments of courts within the Community’, and ‘harmonise alltheir national laws appertaining to the Community’.88 This maybroadly be interpreted to encompass issues of privateinternational law. However, it is not indicated anywhere whethersuch reforms have taken place.

Developing private international law in Africa, particularly inthe EAC, would demand both national efforts and internationalengagement. At the national level, there is the need to codifysome of the rules on the subject into legislation which can bedone after careful consultation and assessment of the adequacy ofthe rules to meet present challenges.89 Existing internationalconventions on the subject could serve as a useful basis for someof the contemplated legislation. In this respect, the Hague

87 See Preamble of the EU Brussels Regulation 44/200188 Article 126 EAC Treaty89 See Article by Richard Frimpong Oppong: Private international law in

Africa: The Past, Present and future. Published by the American Society ofComparative law. Vol.55, No. 4(Fall, 2007 PP 677 - 719); and North P.,‘Private International Law: Change or Decay,’ in: I.C.L.Q. 2001, p. 477-508; Forsyth C.F., ‘The Eclipse of the Private International LawPrinciple? The Judicial Process, Interpretation and the Dominance ofLegislation in the Modern Era’, in: Journal of Private International Law (J. Priv.Int’l. L.) 2005, pp. 93-113.

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Conference of Private International Law has come in to achievethis goal globally.90

4.1.1 Hague Conference on Private International Law and membership of AfricanCountries

The Hague Conference on Private International Law (HCCH) is theprincipal international body that aims at the progressiveunification of the rules of private international law. It alsopromotes cross-border cooperation among national judicial andadministrative bodies especially in the areas of internationalcivil procedure. The Conference was formed in 1893 to "work forthe progressive unification of the rules of private internationallaw". It has pursued this goal by creating and assisting in theimplementation of multilateral conventions promoting theharmonisation of conflict of law principles in diverse subjectmatters within private international law. Sixty-eight nations arecurrently members of the Hague Conference, including China,Russia, the United States, and all member states of the EU.91

According to Oppong, Africa’s engagement with the work of theConference has been both, direct and indirect, albeit minimal.92

Currently, of the 53 African states, only 3 are members of theConference. They are Morocco, Egypt, and South Africa. Comparedwith membership from other regions, Africa is highly under-represented. The absence of African participation in thenegotiation process may lead to situations where the interests ofAfrica are not fully accounted for during the negotiating

90 See Siehr K., ‘National Private International Law and InternationalInstruments’ in: Reform and Development of Private International Law: Essays in Honour of SirPeter North (Fawcett J. ed.), Oxford 2002, p. 335-347.

91 See Hague Conference on Private International Law website, http://www.hcch.net/index_en.php

92 Supra, note 501

process. Aside from the participation of states in the work ofthe Conference, it is also important to examine the degree ofAfrican academic or intellectual involvement in the work of theConference. None of the African textbooks on privateinternational law devotes any significant attention to the workof the Hague Conference and its significance for Africa.93

He further observes that as far as private international lawissues are concerned, most African States have outdated rules andhave not taken advantages of development of these rules in otherdeveloped economies like Europe.94 Accordingly, the development ofprivate international law has stagnated in Africa. This isreflected in the neglected and underdeveloped state of thesubject, and the near absence of Africa in internationalprocesses, academic forums, writings and the institutions thathave significance for the subject.95 This is true as the Instituteof Private International Law in Africa has also not achieved muchand Africa is still lagging behind in the area of privateinternational law.96

4.2 Interaction of legal systems in a common market

93 Supra, note 5094 Ibid. 95 Ibid. 96 Institute of Private International Law. The objectives of the Institute

are to undertake and publish research in the field of private international law, especially in the African context. It drafts regulations, conventions, model laws and other legislative instruments in the field of private international law, for utilisation by the various organs and member states of the African Union (AU). In addition, it acts as an information centre for The Hague Conference on Private InternationalLaw, providing training and arranging conferences, seminars and workshops in the field of private international law. The Institute has built up a network of experts in the field, helping to establish an information system on the internet for private international law, focusing on Africa

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The above background is important since private international lawprovides a barometer for measuring the extent to which country'slegal systems interact with each other. It creates a linkagebetween legal systems without unifying them.97 Thus, as the CommonMarket takes off, legal systems will be interconnected and thecitizen of the community will interact with each other. Thenumber of private international law issues will increase andthere will be a need to address them.98 Although the harmonisationof civil procedural issues is not specifically provided for underthe amended East African Treaty, Article 126(2) b stipulates thatPartner States will undertake to harmonise all their nationallaws appertaining to the treaty.99 The Treaty therefore allowspartner states to harmonise their national laws so as to enhancejudicial cooperation and meet the community objectives containedin Article 5 of the Treaty.100 Judicial Cooperation can beachieved by means of a community instrument that provides forrules on jurisdiction that can be directly applicable to partnerstates so as to safeguard an area of free movement of goods andpersons. The instrument can provide for rules that areascertainable, predictable and aimed at removing any barrierscreated by differences in national jurisdiction rules.

This is the approach that was adopted by the EU to which I intendto make a comparison with the existing legal framework within theEAC. The EU systems can be compared with that of the EAC since itis the only system that adopted a community instrument to dealwith international jurisdiction in a bid to maintain and developan area of freedom, justice, and security within an internalmarket. The EU realised that a true internal market could only beadequately achieved where legal relations were secured. Just liketheir counterparts in the EU, the EAC needs to adopt rules that

97 Supra, note 3198 Ibid. 99 Article 126 East African Treaty 100 Article 5 contains the objectives of the EAC.

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would avoid and or mitigate negative consequences associated withdifferences from national jurisdiction rules. Lessons have to belearned from the implementation of harmonised rules in the EU soas to facilitate trade in the EAC. It is important to rememberthat economic cooperation can be achieved alongside judicialcooperation if the EAC is to develop a common market withoutfrontier. Below, an analysis of the existing legal framework willindicate how having different national regimes can lead to hightransaction costs, limit cross-border trade and investment –among other things. A suggestion will be made to reforms directedat reducing transaction cost and removing legal uncertainties –so that citizens in the common market can easily access courts inall member states.

4.3 Existing legal framework within the East AfricanCommunity

To understand the existing legal framework, it is important toconsider the impact of colonialism on the legal systems ofpresent day East Africa. Indeed, the legal differences within thecommunity can be explained from adoption of colonial legislationof the colonial master. For example, the former colonies ofBritain, that is: Kenya, Uganda and Tanzania, apply the doctrinesof Equity and Statutes of general application which were in forcein England at the time when each of the above Countries obtainedlegislation. Thus the rules on private international law thatwere in force at the time were adopted in the domesticlegislation of the three common law States.101 The rules appliedin civil proceedings are the same in the three States and anyslight differences which were incorporated reflect the cultural,social, political and economic beliefs of the respective states.

101 Supra, note 311

These differences allow for the application of supplementaryrules of customary law, Islamic law, established customs andusages, and principles of justice, equity and good conscience.102

The supplementary rules when applied must not be inconsistent orrepugnant with the Constitution or any written law.103 The problemhere is that even if the rules are the same, they have not beenable to eliminate negative jurisdiction issues such as concurrentjurisdiction, exorbitant jurisdiction, or the application ofdiscriminatory rules. These problems will be elaborated on laterin this chapter.

The rules on jurisdiction can be found in the Civil Procedure Actand the Civil Procedure Rules. The power to invoke these rules bycourts is derived from the Constitution104 and the JudicatureAct.105 As will be discussed below, the jurisdiction of courts,which is based on the English traditional law, is derived fromservice of process on a defendant. This is often seen as a

102 Differences contained in the Judicature Acts of the three States. For instance, Section 3 of the Judicature Act of Kenya. Courts are to exercisejurisdiction in Conformity with the Constitution, subject to all written laws including Acts of the United Kingdom, subject thereto, and in so far as those written laws do not extend or apply, the substance of the common law, the doctrines of equity and the statutes of general application in force in England, and procedures and practices observed in the courts of justice of England at that date. Courts to be guided by African customary law in civil matters, so far as it is applicable and is not repugnant to justice, morality or inconsistent with any written law. Section 14 of the Judicature Act of Uganda Chapter 13 allows application of written law,common law and doctrines of equity, established and current customs or usage. Section 14 allows courts to observe the any existing customs, whichare not repugnant to natural justice, equity, good conscience and not incompatible with written law. Section 11 of the Judicature and Application of laws Acts allows application of customary law and Islamic law in particular matters provided the members of the community to which such customary or Islamic law applies follow that law.

103 Ibid. 104 For instance Article 139 of the 1995 Constitution of the Republic of

Uganda and Article 162 of the Constitution of the Republic of Kenya. 105 Section 3 of the Judicature Act of Kenya Chapter 8 , Section 3 of the

Judicature and Application of Laws Act chapter 358 of Tanzania. 1

precondition before the courts can exercise jurisdiction over adefendant.106 The traditional law provides for rules wherebyservice may be validly effected both within and outsidejurisdiction and these procedural rules are contained in theCivil Procedure Act and Civil Procedure rules for Uganda andKenya,107 and the Civil Procedure Code for Tanzania.108

4.4 Clash of jurisdiction rules in East African Common Lawand Civil Law oriented States

The EAC is composed of both common law and civil law jurisdictionand the rules of determining jurisdiction differ. Under commonlaw, reliance is often given to traditional English rules whendetermining their international jurisdiction. The English rulesallow courts the discretion to determine their competence in aninternational dispute. The civil law jurisdictional rules, leavethe courts with little discretion to determine theirjurisdiction. Whereas under common law a defendant can be subjectto the jurisdiction of a court by way of serving a claim form onhim or her in accordance with the civil procedure rules, undercivil law a claim can be instituted in the court where thedefendant is resident.

Secondly, there are other doctrines like forum non conveniens (Latinfor “forum not agreeing”)109 applied under common law and lis alibipendens (Latin for “dispute elsewhere pending”)110 applied under106 See Schmitthoff, Export Trade: The Law and Practice of International

Trade, Thomson Reuters, , at p. 497107 Civil Procedure Act of Kenya Chapter 21, Civil Procedure Rules of Kenya,

Civil Procedure Act of Uganda Chapter 71 108 Civil Procedure Code of Tanzania, 1966. 109 This is an attempt by court to determine which court is more appropriate

to hear a case. See Hartley 2009, pp. 205 to 209 for further reading. 110 Under this, the court cannot hear proceedings if the same action is

already pending before a court in another country. See Hartley 2009, p. 1

civil law in matters relating to determination of jurisdiction.The doctrine of lis alibi pendens is used by courts to declinejurisdiction in favour of the court first seized with a claim soas to avoid parallel proceedings. The court second seized with aclaim will reject jurisdiction in favour of the court firstseized. On the other hand, under the common law doctrine of forumnon conveniens, a court can decline jurisdiction in favour of theappropriate court even when is has jurisdiction. The court thusapplies its judicial discretion when there are courts in at leasttwo judicial systems with jurisdiction to hear the case. It doesnot matter whether a court was seized first or second.111

The above provide some of the conflicts that create a clashbetween common law and civil law oriented states and explains whyparties when negotiating international contracts, usually pressfor a jurisdiction clause. Where such a clause is not inserted ina contract, parties will often engage in forum shopping.112 Theconcept of forum shopping explains why litigants often want toshop for a forum most likely to provide a favourable outcome andconvenience. Forum shopping is generally considered as a negativeaspect affecting international trade. The reason is that partiescan undertake an improper choice of jurisdiction by manipulationof connecting factors, in order to prevent the court of properjurisdiction from hearing the case. I will now move to considerthe rules on jurisdiction under the civil procedure rules ofcommon law states of Kenya, Tanzania and Uganda

The reason for using the civil procedure rules of common lawstates is because they are the rules that I could easily accesson the internet. Most of the legal literature of Rwanda and

205. 111 Ibid., pp. 205 to 209. 112 Forum shopping is the selection of the most favourable forum by the

claimant. See Harvard Law Review (1990), 1677-1696, at 1677 et seq. (editorial article). See also the House of Lords in The Atlantic Star, [1974] AC 436, at 442.

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Burundi is in French and this made it difficult for me to usethat information. However, what is important, is for this pieceof research to highlight some of the major differences withregard to service of claim form in light of the law of foreignstates. One thing that should be kept in mind is that the rulesof international law provide that states should not infringe onthe sovereignty of other states. Thus once a claim form is to beserved in a foreign state, the procedure must be carried out in away that does not go against the law of the foreign state. Inthis regard, there is a major difference between the common lawcountries and some civil law countries.

4.5 Main Jurisdiction rules under the Civil Procedure Rulesof EAC common law states

Under the Civil Procedure rules, jurisdiction is purely a matterof procedural character except where matrimonial relief issought.113 There is no necessity for a court seized with an actionin personam to determine its competence by reference to thenationality, domicile, residence of the parties or the nature ofthe cause of action.114 Whether a court is competent or notdepends solely upon whether in accordance with the civilprocedure rules, the proper steps were taken to bring thedefendant under the jurisdiction of a particular court.115 Thus,an action will commence with the service of a writ of summons onthe defendant(s) in a manner prescribed to enter an appearanceand answer the claim.116 The procedure for service of summons andother court documents is provided for under Order V rules 1 - 32

113 Cheshire and North's Private international law. 10th edition, p. 77114 Ibid. 115 Ibid. 116 Section 20 of Civil Procedure Act laws of Kenya. The same section can be

found under Civil Procedure Act of Uganda 1

of the Civil Procedure Rules.117 The writs of summons order thedefendant to appear before court at a specified time and place.Once service is effected within the law by a duly recognisedprocess server, then court will have jurisdiction.118 Order V rule2 provides for procedure of service on Corporations, and order Vrule 10 provides for service on agents with whom the defendantcarries on business.

4.5.1 Service where defendant is present within jurisdiction of court

The civil procedure rules provide for service of a claim form onthe defendant whilst he/she is present in the jurisdiction ofcourt where the plaintiff intends to initiate proceedings. Thus,in order to form a connection between the Court and thedefendant,119 the defendant can be served even if he/she is withinthe territory of the forum for a very short time. This is foundedon a firmly established principle under English law that “whoeveris served with the King's writ and can be compelled consequently to submit to the decreemade is a person over which the courts have jurisdiction”.120 In practice, theserules are invoked so as to enable a plaintiff effect service onthe defendant whilst he or she is present in jurisdiction ofcourt. I have not come across a related case decided by any courtin the three East African states. I will however make referenceto some English cases where this principle has been applied. Thesame principles would be upheld in common law jurisdiction since117 See Civil Procedure Rules of Kenya, Tanzania and Uganda118 Order IV rule 3 Civil Procedure rules of Kenya119 Sections 11 to 15 Civil Procedure Act.120 See Viscount Haldane, John Russell v Cayzer, Irvine and Co Ltd [1916] 2 AC

298.1

they allow for application of both common law and written law.

For instance in the case of Colt v Sarlie:121 a company incorporatedin New York obtained a judgment in New York against a Frenchmanand sought to enforce it in England by serving a writ on him at aLondon hotel where he was staying for one night. Court held thatthe English court had jurisdiction over him. Another case ofMaharanee of Baroda v Wildenstein involved a fraudulent sale of apainting between the claimant and the defendant who were bothdomiciled in France.122 The claimant sued the defendant to obtainrescission of the contract and brought proceedings in England. Inthis case, the claim form was served on the defendant in Englandwhile he was at a horse race during a temporary visit in England.The defendant applied to have the action set aside on the groundthat it was frivolous and vexatious and an abuse of the processof the court. Held in the judgment of Lord Denning that: “In thiscase the writ has been properly served on the defendant. While he is in this country,albeit on a short visit, the plaintiff is prima facie entitled to continue the proceedings tothe end. He has validly invoked the jurisdiction of the Queen's court; and he is entitled torequire those courts to proceed to adjudicate upon his claim”. However, theprinciple in Russell v Cayzer123 suggests service will not beupheld if the defendant has been tricked into or kidnapped andbrought into England.

4.5.2 Service Outside Jurisdiction

Since courts in one state do not have jurisdiction over persons,actions or property situated in another state, the civilprocedure rules provide that service can only be effected within

121 Colt Industries v Sarlie (No.1) [1966] 1 WLR 440 (CA)122 Maharanee of Baroda v Wildenstein [1972] 2QB 283123 John Russell and Company Limited v. Cayzer, Irvine and Company Limited

[1916] 2. A.C. 2981

the jurisdiction of the court. For a claimant who may wish tobring a defendant domiciled in another State under jurisdictionof his court, he must seek for leave from court to serve anysummons outside the court’s jurisdiction.124 An application toserve outside jurisdiction is made without notice to thedefendant and is usually made on affidavit. The onus is on theclaimant to show that the case comes within the jurisdictionalrules contained under the Civil Procedure rules and that it isappropriate for the matter to be heard by the court grantingleave to serve outside jurisdiction. It is often not necessaryfor the claimant to give full proof of the facts necessary toestablish jurisdiction but the claimant must show that a goodarguable case exists. As regards the merits of the claim, theclaimant must show that there is a serious question to be triedbasing on the substantial question of the law or facts (or both).All the requirements above are based on the supposition thatservice of a claim form in a foreign country is a serious matterthat should not be lightly undertaken.

Administration of justice requires that the claimant during anapplication for leave to serve outside jurisdiction makes a fulland fair disclosure of the facts in issue. Since the applicationis one sided and the defendant is not present to give reasons whyproceedings should be heard in his territory, the claimant mustthen put all relevant facts before court, even those that areagainst his interest. Failure to do so could be a ground forsetting aside service out of jurisdiction at a later stage. Ifpermission is given, the claimant must thereafter ensure that theclaim form is served in a manner prescribed by the law. Themethods of service on both artificial and natural persons are124 Order V rule 25 - 32. See also Cheshire and North's Supra at pp 77 – 78.

This is so because under the Civil Procedure Act, a plaintiff/claimant canonly sue the defendant in the courts of the place he or she resides or where the cause of action arose. In case of immoveable property, a suit can only be brought in the courts of the place where the property is situated. See also Sections 11 – 19 of the Civil Procedure Act of Kenya.

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provided for in the civil procedure rules and service must besecured in a manner that does not offend the sovereignty of otherStates. One thing that should be clear when invoking this rule isthat this is one of the areas where court has to use itsdiscretion to grant leave to serve a claim on the defendant whois neither domiciled in the jurisdiction of the inviting court,nor submitted to the jurisdiction of that court. The above is oneof the ways in which defendants domiciled outside the court’sjurisdiction, can be brought under the jurisdiction of theinviting court.

4.5.3 Submission of foreign defendant

Jurisdiction over a foreign defendant can also occur when such adefendant submits to the jurisdiction of court. In suchcircumstances, the court is normally prepared to exercisejurisdiction over him. The defendant can however make anappearance and contest the jurisdiction of court. If thedefendant makes an appearance and does not object to thejurisdiction, the rules do not allow him or her to object to thejurisdiction on appeal. He is treated as having submitted to thejurisdiction of court.

The defendant must expressly state that he contests thejurisdiction of court.125 We will see later in under this chapterhow this rule was applied in the case of Nanjibhai Prabhudas & Co.Limited Vs The Standard Bank Limited of 1968, where it was held that, “bysubmitting to the order of pleadings and taking steps in the proceedings by filing a

125 See Section 16 of the Civil Procedure Act and Order 9 rule 3 that providesfor grounds which the defendant can use to dispute the jurisdiction of court.

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defence, the defendant waived any objection to the court’s jurisdiction”.126

4.5.4 Summary on the main jurisdiction rules

Whereas common law countries do not consider the service of aclaim form on their territory as an infringement of theirsovereignty, some civil law countries regard such service as anofficial act that would infringe on their sovereignty – unlesspermission is first sought.127 I am not sure whether this ruleapplies in the civil law jurisdiction of Rwanda and Burundi; butthis is a difference that should be considered when dealing withissues on service outside jurisdiction of court. Indeed, if suchis a rule in Rwanda and Burundi, then this would create extraproblems for the community and further shades a light on why thecommunity needs to harmonise their rules on jurisdiction. We willsee in the discussion below why the EAC needs to harmonise theirrules and how some arguments in court by lawyers and judgesindicate why matters of private international law are not yetappreciated in many courts within the EAC. What will be discussedbelow does not exhaust reason why the community needs toharmonise their jurisdiction rules but simply gives a fewexamples basing on some decided cases.

4.6 Need for harmonised Civil Procedural Rules onjurisdiction

We have seen from the discussion above that jurisdiction toadjudicate under the common law jurisdictions of the three East

126 Nanjibhai Prabhudas & Co. Limited vs The Standard Bank Limited, East African Court of Justice, Civil Appeal no. 13 of 1968

127 Hartley 2009, p. 97 1

African States is based on the English traditional rules. Apartfrom cases where jurisdiction is limited notwithstanding that thedefendant was served, courts in the three countries can extendtheir jurisdiction beyond their boundaries – provided there issufficient connection between the claimant and defendant, orclaimant and cause of action or property. In such situations, theclaimant obtains leave from court to serve the defendant outsidecourt’s jurisdiction. This aspect of service out of jurisdictionis important since it explains the exorbitant rules onjurisdiction that can be applied to subject a defendant to aparticular jurisdiction there by creating a connecting factorbetween the defendant and Court. Circumstances where courts arelikely to exercise their exorbitant jurisdiction are listed underorder V rule 21 of the civil procedure rules.128 There are alsoother legal consequences like multiplication of forum,application of discriminatory jurisdiction rules, and failure togive effect to choice of forum clauses that would warrant the EACto harmonise their rules. They will be discussed in detail below.

4.6.1 Problem of Exorbitant jurisdiction

Exorbitant territorial jurisdiction in civil cases comprisesthose classes of jurisdiction, although exercised validly under acountry's rules, that nonetheless are unfair to the defendantbecause of a lack of significant connection between the sovereignand either the parties or the dispute.129 An example of such can128 They include contracts entered into within the jurisdiction of the

inviting court, and breach has taken place within the jurisdiction of the inviting court, any relief sought against any person domiciled or ordinarily residents in the country of the inviting court, obligations affecting immoveable property situated in the country of the inviting court. See Order V rule 21 of the Civil Procedure Acts of Kenya and Uganda.

129 Kevin M. Clermont and John R.B. Palmer, Exorbitant Jurisdiction, Maine Law review, 2006, Vol.58, p. 474.

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be seen in the common law jurisdiction rules that allow courts toassume jurisdiction – provided the defendant was served withinthe confines of that court.130 The exercise of such exorbitantjurisdiction increases the likelihood of any of the Courts in thecommon law jurisdiction of the community to have jurisdiction.This can lead to conflicting judgments, difficulty in enforcingjudgments rendered by a court that exercised excessivejurisdiction, time and resource wasting, unfairness to thedefendant and further offends the sovereignty of the foreignState in which the exorbitant jurisdiction is extended. Thus, ina cross-border contract complications often occur if the parties'contract fails to specify the particular court which may havejurisdiction over any dispute which may arise. This can lead toapplication of exorbitant national rules like allowing to serveoutside jurisdiction so as to subject the defendant to theplaintiff's forum.

This can be illustrated in the case of Nanjibhai Prabhudas & Co. LimitedVs The Standard Bank Limited,131 where parties wasted time and resourcesadjudicating over a procedural error that could have had aneffect on jurisdiction. The case was an appeal against a decisionof the High Court of Kenya given on a motion by a defendantseeking an order that service upon it of a summons be set aside.The High Court dismissed the application and from that decisionthe applicant, who was the defendant in the suit which gave riseto the application, appealed to the Court of Appeal of EastAfrica.

The applicant who was a limited liability company incorporated inUganda claimed that the Kenyan Court had no jurisdiction toentertain the proceedings because summons which were served uponit were defective on the ground that they contained a seal of asubordinate court, and, secondly, that it was a summons and not a130 Supra, note 121 131 Supra, note 126

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notice of summons which had been served on the defendant. Thedefendant claimed that since service on it was defective, thecourt had no jurisdiction as service was effected contrary to OrderV, rules 25 and 26132 and consequently, everything founded upon it,such as the judgment, became equally a nullity; even though thejudgment itself was not directly challenged in the proceedings.

In his judgment, Justice Newbold held that “a defendant who, on beingserved with a writ, enters appearance unconditionally and does not move the court tostay the proceedings submits to the jurisdiction of the court through his conduct. Bysubmitting to the order of pleadings and taking steps in the proceedings by filing adefence, the defendant waived any objection to the court’s jurisdiction”.

The above case reflects an example of negative consequencesassociated with forum shopping and national rules allowing forapplication of exorbitant rules. One can conclude that thedefendant probably had a desire to delay the proceedings so thathe could have the matter resolved by the home court where hecould possibly have had advantage. On the other hand, if thedefendant had contested jurisdiction from the moment he enteredan appearance, there was going to be another battle for venue.But still, we can see how it took a long time for court to make adecision which went as far as the East African Court of Justice,echoing the fact that having rules which are certain andpredictable is important for a common market as a means ofprotecting persons that will be engaged in cross-border trade.

4.6.2 Problem of Concurrent Jurisdiction

132 Order 25. Where leave to serve a summons out of Kenya has been granted under rule 21 and the defendant is a Kenya citizen, the summons shall be served in such manner as a court may, Under order26. Where the defendant is not a Kenya citizen and is not in Kenya notice of the summons and not the summons itself is to be served on him. Civil Procedure Rules of Kenya

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Concurrent jurisdiction is the authority of different courts,each of which is authorised to entertain and decide cases dealingwith the same subject matter.133 In a common market, such asituation may arise where litigation is commenced in more thanone jurisdiction in relation to the same dispute (after thedispute has arisen), so as to either delay proceedings orbelieving that the home court may be more advantageous. Forexample, A can sue B both in Uganda and Kenya or A can sue B inUganda whereas B sues A in the same action in Kenya. Suchconcurrent actions involving the same issues between the sameparties are referred to as lis alibi pendens as explained earlierabove.

Imagine a Kenyan Company agrees to perform a contract for sale ofgoods in Uganda, and the contract provides that the KenyanCompany is to deliver the goods to the buyer in Uganda andpayment is to be effected in Kenya. The problem of concurrentjurisdiction will occur if the Ugandan buyer refused to pay onthe grounds that the goods are defective and sues the Kenyanseller in Uganda for breach of Contract and the Kenyan sellersues the Ugandan buyer in Kenya for non-payment. The availabilityof alternative forum means that proceedings on the same claim maybe conducted concurrently in courts of different Partner Stateswith the risk that those courts can arrive at mutuallyincompatible judgments; thus leading to conflict ofjurisdiction.134 The situation is worsen by Section 6 of the CivilProcedure Act135 that the tendency of a suit in a foreign courtshall not preclude a court from trying a suit in which the samematters or any of them are in issue in a foreign court.

Further, the difficulty of dealing with such an issue is

133 Online Legal Dictionary, at: http://legal-dictionary.thefreedictionary.com/Concurrent+Jurisdiction

134 Schmitthoff 2009, p. 497; and Hartley 2009, p. 13 135 See Section 6 Civil Procedure Act of Kenya

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contained in the doctrines of forum non conveniens and the lis pendensrules which I briefly discussed in Chapter 1. These rules areapplied to resolve a situation like one discussed above. Byapplying forum non conveniens under common law jurisdiction, thedefendant would apply for a stay so as to have the matter heardin a more appropriate court and the plaintiff would have to showwhy a stay should not be granted. Recall that this is applied atthe discretion of court and it is therefore not guaranteed thatthe case will be moved to the appropriate court. The questiontherefore is whether a court would give up its discretion infavour of a foreign court. In the next paragraph, I will dealwith discriminatory rules under national law which wouldotherwise solve this problem; except that the application of thatrule is limited to national courts and does not go beyond toeliminate concurrent jurisdictions across borders.

Still under civil law, a court second seized would have torelinquish its jurisdiction until the court first seizeddetermined its competence. But will a common law court whichbelieves that it is an appropriate court give up its givenjurisdiction in a lis pendens situation. Would the civil court saythat it is wrong for the common law court to hold ontojurisdiction? Would the common law court continue withjurisdiction to safeguard the interests of litigants? What wouldbe the effect of the common law application of anti-suitinjunction?136 Wouldn’t an anti-suit injunction amount to seriousconfrontation to the dignity of a foreign court under civil law?The current rules do not specifically answer these questions andthis justifies the need for harmonised rules that would help inresolving such disputes which are likely to arise in a commonmarket.

136 This is an order directing a claimant in a foreign court to discontinue that action failure of which would amount to contempt of court leading to penalty.

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4.6.3 Application of Discriminatory Rules

Discriminatory rules are those rules that are imposed on aforeign party which would not be imposed on national. The problemwith such rules is that they create a difference in treatment fornationals and non-nationals in circumstances where there is noobjective difference such as to justify that difference intreatment. In the case below, we will see how this can happenwhere a partner state can be subject to discriminatory rulesapplicable under national law. Under the Civil Procedure Rules ofthe three States, a foreign plaintiff suing in anotherjurisdiction is under an obligation to file for security forcosts if a defendant believes that the plaintiff's claim againsthim has no chance of success.137 Secondly, when a case is pendingin a foreign court, the rules do not seek to deter nationalcourts from taking up jurisdiction even where the suit is inrelation to the same cause of action and between the sameparties. Yet, when a case of comparable facts is pending betweentwo courts in the same country, the rules give jurisdiction toonly one court; thereby avoiding concurrent jurisdiction at anational level.

4.6.3 (a) Depositing Security for Cost

137 Security for costs is a common law legal concept of application only incost jurisdictions, and is an order sought from a court in litigation. Thegeneral rule in costs jurisdiction is that "costs follow the event". Inother words, the loser in legal proceedings must pay the legal costs ofthe successful party. Where a defendant has a reasonable apprehension thatits legal costs will not be paid for by the plaintiff if the defendant issuccessful, the defendant can apply to the court for an order that theplaintiff provide security for costs. Furthermore, the amount that isordered by the Judge is in direct correlation to the strength or weaknessof the plaintiff's case brought herewith. The weaker the probability ofthe plaintiff prevailing, the higher the security order. Typically aclaimant will be outside the jurisdiction of the court.

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An application for security for cost was made in the followingcase of Deepak.K. Shah & 3 others V Mananura & 2 others.138 The Plaintiffswho had commenced proceedings in the High Court of Uganda wereresidents of Nairobi, Kenya, which is outside the jurisdiction ofthe Ugandan High Court. The Defendants brought an application foran order that the Plaintiffs pay security for cost. The defendantcontented that the fact that the plaintiff's residences wereabroad was a prima facie ground for ordering payment of securityfor cost. Further, that such a plaintiff could only escapepayment of security if he owned property within the courtsjurisdiction which the present Plaintiffs did not own. Payment ofSecurity for costs is a requirement for a foreign plaintiff toobtain jurisdiction under common law jurisdictions. For instanceunder the laws of Uganda, it is based on Order 23 of CivilProcedure Rules139 and the English case of Ebrard v Gassier.140 It washeld that “given the re-establishment of the East African Community, there could nolonger be an automatic and inflexible presumption for the courts to order security forcosts with regard to plaintiffs resident in the East African Community when they bringclaims against Ugandan residents”.

The above case illustrates that if you are a plaintiff's fromanother jurisdiction suing in any of the common law jurisdiction,you must pay security for cost if you have no assets within thejurisdiction of court where you have filed a claim. Although theplaintiff did not pay security for costs, the case demonstrateshow national rules can lead to differences in treatment ofnationals and non-nationals, and how such a rule does not securelegal protection of all persons.

138 Deepak. K.Shah & 3 Others V Mananura & 2 Others (Miscelleneous ApllicationNo. 361 of 2001 High Court Commercial division of Uganda.

139 Order 23 of the Civil Procedure Rules of Kenya, Uganda & Tanzania140 Ebrard V Gassier (1885) Chd 232

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4.6.3 (b) Pendency of a suit in a foreign court

Another form of application of discriminatory rules can be foundunder Section 6 of the Civil Procedure Act of Kenya.141 Itprovides that “no court shall proceed with the trial of any suit or proceeding inwhich the matter in issue is also directly and substantially in issue in a previouslyinstituted suit or proceeding between the same parties, or between parties under whomthey or any of them claim, litigating under the same title, where such suit or proceedingis pending in the same or any other court having jurisdiction in Kenya to grant the reliefclaimed. The pendency of a suit in a foreign court shall not preclude a court from tryinga suit in which the same matters or any of them are in issue in such suit in such foreigncourt“. I find this rule discriminatory in the sense that it seeksto avoid concurrent proceedings which are only conducted in Kenyabut does not avoid such proceeding if conducted outside Kenya.The same rule is contained in the Civil procedure rules of Ugandaand Tanzania.

This rule is discriminatory since it does not seek to avoidproblems of concurrent jurisdiction discussed in paragraph 4.6.2above. This is likely to lead to irreconcilable judgments. As Ialready described, one party can sue in one country for breach ofcontract and the other party sues in his country for non-paymentin relation to the same contract. If both parties are successfulin their respective courts, then judgments cannot be reconciled.Kenya, Tanzania and Uganda apply the Foreign Judgment (ReciprocalEnforcement) Act of 1933,142 under which they recognise andenforce each other’s judgments. Under that Act, a foreignjudgment will not be enforced if, inter alia, the foreign courtlacked jurisdiction to adjudicate the matter, the merits of thecase were not considered by the foreign court, if the proceedingin the foreign court were in contravention of the rules of

141 Section 6 Civil Procedure Act of Kenya142 Foreign judgment (reciprocal enforcement) Act 1933 adopted in Uganda,

Kenya and Tanzania1

natural justice, or that the judgment was obtained by fraud.143

The rules do not provide that a foreign judgment will not berecognised and enforced if it is irreconcilable with an earlierjudgment given in another reciprocating state involving the sameaction and between the same parties.

The fundamental principles of the community contained underArticle 6144 of the EAC Treaty require that there should be nodifference in treatment between nationals of different stateswithin the community. When a dispute is international, it wouldbe important to have uniform procedural rules designed toeliminate any procedural requirements that may hamper litigantsfrom enforcing their rights in different States within thecommunity. The defendant in this case was trying to convincecourt not to assume jurisdiction before the plaintiff compliedwith the rule that warrants foreign plaintiffs to pay securityfor cost.

4.7 Choice of Court Agreements

4.7.1 General remarks

Choice of court agreements – also referred to as 'jurisdiction

143 See Section 3(2) of Foreign judgment (reciprocal enforcement) Act, Chapter47

144 Article 6 of the East African Treaty provides for principles to be followed by Partner States

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agreements' or 'forum selection agreements' – are agreements asto where litigation will take place. They have been referred tothem as the most important jurisdiction devises of modern timesand that if courts respect them, they would enable parties toknow in advance where a case will be brought.145 By agreement,parties may decide and specify which court will have jurisdictionor more so, which court will have jurisdiction depending on whobrings the claim. Parties can also under a choice of courtagreement decide to confer jurisdiction to one court andexclusively deny other courts from exercising jurisdiction. Thechoice of court agreement can further relate to proceedings underthe contracts or to any other disputes related to the contractlike tort claims. It can also relate to proceedings that havearisen or to those that may arise in future disputes.146

In paragraph 4.4.3, I discussed submission of foreign defendantsas one of the ways in which an English court can havejurisdiction of the defendant. In that instance, I discussedsubmission by way of appearance whereby a foreign defendantenters an appearance before a court seized with a claim and doesnot contest jurisdiction. Under a choice of court agreement, adefendant can submit to a court chosen by the parties even if ithas no connection with his place of residence or domicile –provided it was a court agreed upon between him and theplaintiff. This would cause no problem but issues would arisewhen one of the parties, in defiance of a choice-of-courtagreement, starts proceedings in another court.

There are various questions that would need to be resolved. Forinstance, how will courts within the EAC interpret forum clausesin international contracts in circumstances where parties arelocated in different countries or in the same country but imposejurisdiction on a court outside their own jurisdiction? How will145 Hartley 2009, p. 163146 Ibid.

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courts for instance in the common law jurisdiction interpret sucha clause since their constitutions give their High Courtsunlimited jurisdiction in civil and criminal matters?147 What isthe effect of a jurisdiction agreement if the defendant makes anappearance in a court where the plaintiff has commencedproceedings contrary to a jurisdiction clause. These are issuesthat often cause conflict in international commercial contractsand the existing legal framework does not seem to answer allthese aspects.

4.7.2 Conflict between Constitution and Choice of Court Agreements

Using the constitutional clause on unlimited jurisdiction of thehigh court is an issue that is often used to deny defendants whorely on a jurisdiction clause in a contract when disputingjurisdiction of the court seized with a claim in contravention offorum clause. Many judges are often reluctant to give effect to aforum clause on the ground that a private agreement cannot oustthe jurisdiction of court. This was upheld in the cases ofSebagala Electronic Centre vs Kenya National shipping Lines,148 and RaytheonAircraft Credit Corporation V Air Al – Faraj Limited.149 In the latter case, theappellant Raytheon Aircraft Credit Corporation brought an applicationchallenging the jurisdiction of the Kenya High Court on theground that the parties had entered into an exclusive choice ofcourt agreement giving jurisdiction to the State of Kansas, USA.Counsel for the respondent argued that the jurisdiction conferredby Section 60150 of the Constitution of Kenya cannot be limited bya contract between two parties. The trial court upheld the

147 See for instance Article 139(1) of the Constitution of Uganda. 148 Sebagala Electronic Centre-vs-Kenya National shipping Lines reported in

(1997-01) Uganda Commercial Law Reports page 389, 149 Raythoen Aircraft Credit coporation V Air Al Faraj Limited (Civil Appeal

No.29 of 1999) Judgment given on 8th July 2005150 Section 60 conferred unlimited jurisdiction on the High Court of Kenya.

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respondent's argument and dismissed the preliminary objection tojurisdiction. It was courts view that Section 60 gave the KenyaHigh Court jurisdiction which could not be interfered with aprivate agreement. Court further relied on the Nigerian case ofSonnar (Nigerian) Ltd, V Partenreedri M S Noordwind,151 where Oputa JSCqueries whether “parties by their private act can remove thejurisdiction vested by the Constitution”.

The decision by the trial Court in Raytheon Aircraft Credit Corporationwas later overturned in 2005. The court of appeal held thatSection 60(1) of the Kenyan Constitution does not authorise theHigh Court to disregard private international law on the statusof choice of law and choice of form in international contracts byassuming jurisdiction over persons outside Kenya.152 In Uganda,Lady Justice M.S. Arach-Amoko upheld a choice of forum clause infavour of English courts and stayed proceedings that had beenlodged in the commercial court of Uganda.153

The above cases are significant since they demonstrate how choiceof forum clauses are interpreted by various Courts. Some judgesand counsel still believe that choice of court clauses infringethe constitutionality of High Courts. It is therefore importantfor uniform rules to be in place so that the application ofconflict rules is used to uphold party autonomy so that courtsare willing to enforce forum clauses without letting partieswaste time and resources adjudicating on whether a forum clauseshould be upheld. Secondly, enforcing forum clauses and other

151 Sonnar (Nigeria) Ltd V Partenreedri M S Nordwind(1988) LRC (COMM)191 152 See Oppong R.F., ‘Choice of Law and Forum Agreement Survives a

Constitutional Challenge in the Kenya Court of Appeal’ in: Commonwealth Law Bulletin 2007, p. 158-163 for references to some pre-1997 cases from other African countries.

153 2005 Decision of the Court of Appeal in Kenya in the case of Raytheon Aircraft Cdreit Corporation; supra note 65. Ugandan decision of the High Court Commercial Division in the case of Uganda Telecom V Rodrigo Chacon t/a Andes Alpes Trading MISC. APPLICATION 337/08 (Arising out of H.C.C.SNo. 644/07)

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rules of private international law is of paramount importance ofany person transacting business across national borders andwishes to be certain of where related disputes will be settled.154

The cost of litigation and its potential outcome often turntowards the parties’ agreement. The enforcement of an agreementis a major concern for transacting parties and it can alsothreaten the investment fortunes of the community.155 Theimportance of forum clauses forms an important part in legalrelations under international trade. This can be seen though thework of many private international law institutions like theHCCH, which I discussed in paragraph 4.1.1. The Hague conferencehas worked to the unification of rules governing choice-of-courtagreements that led to the Hague Convention on choice-of-courtagreements 2005.156

4.7.3 Hague Convention on Choice-of-Court Agreements 2005

The objective of the Convention is to promote international tradeand investment through enhanced judicial co-operation in thebelief that such co-operation can be enhanced by uniform rules onjurisdiction and on recognition and enforcement of foreignjudgments in civil or commercial matters. The drafters believethat such enhanced co-operation requires in particular aninternational legal regime that provides certainty and ensuresthe effectiveness of exclusive choice of court agreements betweenparties to commercial transactions and that governs therecognition and enforcement of judgments resulting fromproceedings based on such agreements.157 The Convention applies in

154 See Article by R.F. Oppong. Choice of law and forum agreement survives a constitutional challenge in the Kenyan Court of Appeal. Also found at http://eprints.lancs.ac.uk/30789/1/R-F-OPPONG-KENYA_COMMENT-CLB.pdf

155 Ibid. 156 Hague Convention to deal with international choice of court agreements.157 See preamble of the Hague Convention on choice-of-court agreements 2005

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international cases and only to exclusive choice of courtagreements concluded in civil or commercial matters betweenparties resident in different contracting states.158 It is theCounterpart of the New York Convention159 on recognition andenforcement of foreign arbitral awards. It is not yet in force;so far, it has been ratified by Mexico, signed by the UnitedStates and EU and needs two more ratification for it to beeffective. This just goes on to show the relevance ofjurisdiction and importance of forum clauses in internationalcommercial litigation.160

4.8 Concluding remarks

We can see from the above discussion that cross-border commercialcontracts can generate a number of jurisdiction problems that cancreate obstacles in a common market; if not resolved, they canthreaten the sound operation of the market. In the EU, the needfor harmonised rules was realised as a means of promoting tradein the EC. In a note sent to Member States on 22 October 1959,161

the commission of the European Economic Community pointed outthat “a true internal market between the six States will be achieved only if adequatelegal protection can be secured. The economic life of the Community may be subject todisturbances and difficulties unless it is possible, where necessary by judicial means, toensure the recognition and enforcement of the various rights arising from the existenceof a multiplicity of legal relationships. As jurisdiction in both civil and commercialmatters is derived from the sovereignty of Member States, and since the effect of judicialacts is confined to each national territory, legal protection and, hence, legal certainty in

158 Ibid., see Articles 1 and 2 159 New Convention of the Recognition and Enforcement of Arbitral Awards.160 Supra, note 91 161 See official Journal of the European Communities. Report on the Convention

on jurisdiction and the enforcement of judgments in civil and commercialmatters (Signed at Brussels, 27 September 1968) by Mr P. Jenard, Directorin the Belgian Ministry of Foreign Affairs and External Trade.

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the common market are essentially dependent on the adoption by the Member States ofa satisfactory solution to the problem of recognition and enforcement ofjudgments”.162

As I conclude this chapter, it is important to point out that ifthe EAC is to attain the economic cooperation needed to raise thestandard of living of people within the community, the area ofjudicial cooperation needs to be enhanced. The community shouldtherefore work towards establishing and developing an area offreedom, security and justice in which the free movements ofpersons, goods, labour and capital is secured. This can be doneby, among other things, harmonising rules on jurisdiction incivil and commercial matters. As this has proved successful inthe EU, the EAC can learn from the good practices of the EU sothat differences in national laws, likely to hamper the soundoperation of the common market are removed and/or mitigated.

162 Ibid. 1

CHAPTER 5

Conclusions

5.0 Some background remarks

The aim of this thesis was to show the importance of privateinternational law and in particular the rules on jurisdiction ininternational commercial litigation. I observed that for the EAC,which launched its common market in July 2010, the area of cross-border litigation will become very active and there will be aneed to make some reforms in the field of judicial cooperation ifthe common market is to operate efficiently and effectively. Ifurther noted that within EAC common, legal systems will beinterconnected and citizens of the EAC will interact with eachthrough formation of different forms of economic contract. Sinceinternational commercial contracts often generate disputesregarding their validity, existence, interpretation, performanceor termination and because of their international nature, disputeresolution will be complicated by various factors such asdifferences in civil procedural rules, language, distance,cultural differences, transaction costs, service of process,multiple jurisdictions and enforcement problems among otherthings.

To tackle these problems, I suggested that the EAC adopts uniformrules of private international law that would provide for a setof uniform jurisdiction rules since the existing legal frameworkof EAC constitutes differences that are likely to create legalbarriers for litigants in the common market. I compared the legalframework of three EAC states with that of the EU since the EUadopted a uniform legal regime on international jurisdiction thatwas adopted to remove certain differences in national

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jurisdiction rules that were hampering the sound operations ofthe EU internal market. The whole aim was to show that economicdevelopment and/or cooperation can be achieved alongside legalcooperation if trade is to be facilitated within the EAC commonmarket – as this has proved successful within the EU, making theEU the second largest economy in the world and the onlymultilateral organisation with uniform community rules oninternational jurisdiction that are directly applicable between30 European states. Having looked at the EU and EAC legalsystems, the question to be asked is what lessons the EAC canlearn from their EU counterparts if EAC is to achieve itseconomic objectives within the common market.

5.1 Lessons from the European Union Jurisdiction system

Whereas the rules of private international law have beendeveloped and adopted in developed economies like the EU andwhereas such economies participate actively in privateinternational law institutions like the HCCH, UNIDRIOT andUNCITRAL, as far as private international law is concerned, thelegal systems of most African states are under-developed.National laws (both statutory and case-law) have not developed toprovide solutions to many important issues. For example, in thearea of international civil procedure, the existing laws areoften very dated, and most African countries have not takenadvantage of international developments in the area. Indeed, thecases examined suggest it is a difficult area and its role infacilitating economic cooperation is not yet appreciated.163 Alook at the private international rules like the Brussels

163 Supra, note 101

Regulation in EU, the Bustamante Code164 between some SouthAmerican states indicate the importance of regulating legalrelations in cross-border trade. While the development of acomprehensive private international law regime has stagnated inAfrica, the volume, structure and techniques of commercialdealings have advanced worldwide to the extent that Africa’sregime may not be able to meet the needs of the emergingcommercial techniques. One such notable trend is the growth inelectronic commerce.165 It is increasingly being advocated thatthe rules of private international law have to be modified tomeet these new challenges from international commerce.166

In the EU, the rules of the Regulation have helped in achievingthis objective. Legal protection has helped to maintain an areathat is free, fair and secure for doing business. It is from thesuccessful implementation of the EU rules – with the objective offacilitating trade – that the EAC should draw some lessons. TheEU has demonstrated that strengthening economic cooperation usinga strong legal framework to facilitate trade is paramount. Thus,having uniform rules on international jurisdiction has helped ineliminating certain differences between national rules governingjurisdiction likely to hamper the sound operation of the internalmarket.167 The EU has helped in dealing with conflicting judgmentsby ensuring that different courts do not adjudicate relatedactions, and where courts assume excessive jurisdiction, anyresulting judgments may not be enforced. The grounds for assumingjurisdiction are not relevant for this purpose, they only becomean issue when there are no assets in the territory of the forumand the successful party tries to enforce a judgment in another

164 Bustamante Code is a Treaty that contains a set of rules which seek to regulate the legal relations of foreign trade among the countries that areparty to the Treaty.

165 See, SO Manteaw. Entering the Digital Market Place- Commerca and Jurisdiction in Ghana(2003) 16 Transnational Lawyer 345

166 IFG Baxter. 1985, p. 6167 See Preamble of the Brussels Regulation. Recital 1 and 2

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country. Then the foreign country might refuse to enforce it.168

The rules of the EU Brussels Regulation also aim at keepingparties to their agreements since taking jurisdiction may becontrary to a choice-of-court agreement. If a party enters intosuch an agreement and then breaks it by bringing proceedings inanother court, that other court is under an obligation to hearthe case provided it is a court in a contracting state. Further,to ensure that courts and parties do not waste time andresources, the principle of legal certainty is emphasised. Mostof the cases decided by the ECJ point out that the objective ofthe Regulation is to ensure that legal protection is guaranteedby applying common rules on jurisdiction so that parties can knowbeforehand where legal proceedings are likely to be commenced.This also helps in protecting the defendants as a party who didnot initiate proceedings; therefore his convenience and expensesare considered. Indeed, the general rule provides that the courtsof the defendant should have jurisdiction.

The above illustrates that a well-thought-out jurisdiction andforeign judgment enforcement regime is indispensable to thesuccess of the economic community. If the enforcement of privatelegal claims is unduly complicated, time-consuming and expensive,it would prove to be an obstacle to closer economic relations andhamper the development of a stable economic union. Complex anddiverse private international law rules engender uncertainty,increase transaction costs, and may drive away investors. Foreconomic actors, certainty, predictability, security oftransactions, effective remedies and costs are paramountconsiderations in investment decision-making. In an era of highcompetition for investors, Africa, with its already small shareof international trade and investment flow, cannot afford toscore low marks on these considerations.169 With all other168 See Article 35169 See P Hay. The Common Market Preliminary Draft Convention on the

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negative consequences associated with differences in procedurerules, it is therefore important for the EAC to consider some ofthese good practices from the EU so as to enhance economiccooperation within the common market where legal protection ofparties is paramount.

5.2 Call for reform of the existing legal framework

Given the importance of private international law in enhancingeconomic cooperation, there is need for the EAC to embark onreforms aimed at establishing a legal and regulatory frameworkwhere private exchanges can take place without any hindrances.Article 126 of the EAC allows for this to take place. However,there is no evidence to show that such legal reforms have beenimplemented in the EAC. It is imperative for the community toimplement uniform rules on international jurisdiction. This wouldachieve the objective of ensuring that the free movement ofgoods, persons, services and capital is secured. With a commonmarket in place, one can foresee that there will be aninteraction of legal systems. Contracts will be entered into bypersons across borders. The problem in the existing rules withinthe EAC partner states pose an obstacle for parties if theirdisputes end up in court. The effect will be for application of

Recognition and Enforcement of Judgments. Some Considerations of Policyand Interpretation. (1968) 16 AJCL 149; PMC Koh. Foreign Judgments inASEAN.A Proposal. (1996) 45 ICLQ 844; Robert C Casad. Civil JudgmentRecognition and the Integration of Multi-state Associations: A ComparativeStudy. (1980-1981) 4 Hasting Intl & Comp L Rev 1, where he identifies aneffective scheme for the mutual recognition and enforcement of civiljudgments as one feature of any economic integration initiative likely toachieve significant integration. See also Dr. Oppong on PrivateInternational law and The African Economic Community: a Plea for GreaterAttention, p. 5.

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the existing rules which will lead to negative consequences thatI discussed in chapter 4 above. It is upon this background that Imake the following recommendations.

5.2.1 Recommendations

I propose that the EAC adopts a community legislation that canprovide for uniform jurisdiction rules. The instrument canprovide for minimum requirements for determining internationaljurisdiction between partner states. Its objective would be toprovide for rules that cannot be derogated from by partnerstates. The existing legal framework in the EAC suggests thatmatters of jurisdiction in cross-bordered cases become pertinentduring enforcement in another state. It is during enforcementthat the courts before which enforcement is sought have toconsider whether the court of origin had jurisdiction.170 If inthe opinion of the enforcing court the foreign court invalidlydetermined its competence, then the foreign judgment will not berecognised thus rendering the whole process nugatory. Parties cantherefore not ascertain or predict whether their judgments willbe recognised and or enforced in the foreign courts. The problemis that what might be regarded as a correct ground of determiningjurisdiction in one state, that may be regarded as exorbitant andor invalid in another jurisdiction. To avoid this uncertainty,the EAC can learn some lessons from the EU which can serve as amodel.

In the EU, the rules which were adopted in the Regulation wereintended at eliminating any obstacles to the functioning of theinternal market that could be derived from disparities betweennational legislation. The fundamental objective of the170 See Section 3(2) The Foreign judgment (Recognition and Enforcement) Act

cap 47 Laws of Uganda1

legislation was to ensure the free movement of judgments betweencontracting states. However, Article 220 of the EC Treaty wasimplemented since member states realised that a double systemthat provided for rules on jurisdiction, recognition andenforcement would facilitate the working of the common marketthrough adoption of rules of jurisdiction for disputes relatedthereto and elimination as far as possible, any difficultiesconcerning the recognition and enforcement of judgments in theterritory of the contracting states. The EU thus adopted acommunity instrument based on the principle of directjurisdiction under which member state courts were required tocomply with jurisdiction rules. The courts asked to recognise ajudgment from another member state are not allowed to considerwhether the original court had jurisdiction. Recognition shouldbe automatically done without the need for any procedures, exceptin cases of dispute.171

The EU system is recommended because it has several advantages.It helps courts from wasting time and resources, it makesenforcement of judgments easier, it allows for uniformapplication of rules on jurisdiction and indirectly avoids issueslike concurrent jurisdiction, it is fair to the parties and helpsthem cut on transaction courts. Parties can easily foreseecompetent courts and therefore not waste time and resourcesadjudicating on matters of jurisdiction. These are importantconsiderations in a common market; but ultimately, it is up topartner states to decide for themselves on whether this ispossible within the EAC common market.

Secondly, the EAC needs to realise that the development ofprivate international law would demand for internationalengagement. Internationally, the EAC can become more involved inactivities of private international law institutions like the

171 Recital 16 Brussels Regulation 1

HCCH,172 UNIDRIOT173 and UNCITRAL. These institutions helpcountries work towards the progressive unification of the rulesof private international law. For example, the HCCH principlemethod achieving its goals consists of negotiating and draftingof multilateral treaties which are called the “Hague Convention”.UNIDRIOT studies the needs and methods of modernising,harmonising and coordination private international law and inparticular commercial laws between states. It also formulates lawinstruments, principles and rules of private international law.

5.3 Conclusion

In this paper, I have discussed the importance of privateinternational law rules on jurisdiction by demonstrating howthese rules can help in promoting judicial cooperation as asupplement for economic cooperation. I have shown that a truecommon market cannot be achieved if legal protection of person isnot realised. For comparative purposes, I used the rulescontained in the Brussels Regulation implemented by the EU toillustrate how the EU worked on removing certain differencesbetween national rules governing jurisdiction that were likely tohamper the sound operation of the internal market. The similaritybetween the EU and EAC is that they have both opened theirboundaries to allow for free movement of goods, services, labourand capital with the objective of improving the welfare of theircitizens.

172 Supra, note 91173 UNIDRIOT is an international Institute of the Private International Law.

Its purpose is to study the needs and methods of modernizing, harmonizing and coordination private international law and in particular commercial laws as between states and to formulate law instruments, principles and rules.

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The difference is that the EU has managed to establish itself asa single jurisdiction other than 27 different states. To thatend, the EU has been able to harmonise most of its privateinternational law rules with the aim of creating a market withoutfrontiers. The EU legal framework indicates that EU citizens areaccorded equal treatment no matter their nationality. Any rulesthat aim at protecting a national of a particular state would beapplied against the national of another state – provided they arefaced with comparable situations. Thus because of this, the EUhas managed to work together as one market with the EuropeanCommission engaging itself in constant reforms aimed at removingany obstacles to cross-border trade. Today, the rules onjurisdiction, recognition and enforcement of judgments in civiland commercial matters are applied in 30 states; thus making astatement on their importance in international litigation.

The above cannot suggest that the EU is not faced with problemsin international jurisdiction; however, it simply denotes thatthe EU has undertaken procedural reforms aimed at improvingaccess to justice, reduction of litigation costs, reduction ofcomplexities related to litigation, and – above all – removingunnecessary distinctions between national rules, practices andprocedures likely to hamper the sound operation of the internalmarket. This is what makes the EU an important comparable exampleto which the EAC should draw some lessons. Although the EAC andthe EU are in different economic situations with differentstrengths and strategies, they are both working towards improvingthe economic welfare of their citizens. This can be attainedthrough a good legal system where protection of citizens isensured. It is therefore important that the EAC realises thenecessity and desirability of harmonisation of civiljurisdictional as a means of removing national jurisdictionbarriers likely to hamper the sound operation of the commonmarket. Economic integration can therefore be achieved and

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complemented with legal corporation.

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