Court orders Kigali to pay UTC $0.5m for illegal seizure and sale of mall
The East African Court of Justice has ruled that Rwanda was in breach of provisions of the East African Community Treaty when it took over and sold the Union Trade Centre mall. This brings to a close a case that dates back seven years.
The EACJ First Instance Division delivered the ruling on November 26 in the case between the Union Trade Centre Ltd (UTC) versus the Attorney General of the Republic of Rwanda & Others.
The court also awarded UTC $500,000 in general damages and cost of the suit, but declined to award compensation for the sold mall. The UTC mall’s value is estimated at $10 million.
In 2013, UTC filed a case at the EACJ, challenging the actions of the Committee in Charge of Unclaimed Property in Nyarugenye district for taking over management of the mall and directing its tenants to pay rent into a bank account in the committee’s name.
The mall was put under statutory management after the Rwanda government classified it as an “abandoned property” in 2013, four years after the majority owner Tribert Rujugiro fled Rwanda. He owned 97 percent.
UTC further challenged the actions of the Rwanda Revenue Authority (RRA) that seized, auctioned and sold the property to recover an alleged tax liability in September 2017. Court affidavit shows the mall was auctioned for RwF6,877,150,000 ($6.87 million)
According to the judgment, the Court found that “the actions of the Committee and the RRA were inconsistent with and in contravention of the EAC Treaty provisions presented by UTC, save for Article 8 of the Treaty which provides for the general undertaking as to implementation of the objectives of the EAC and provisions of the Treaty.”
Rule of law
“The EAC Treaty obliges partner states to respect the rule of law, uphold the principle of good governance, have regard to due process, and respect and uphold the enjoyment of the right to property,” the judgment reads, in part.
“In faulting the actions of the Committee and the RRA, the Court is saying that the said actions were inconsistent with Rwanda’s obligation to enhance and strengthen partnerships with the private sector for sustainable socio-economic development,” said Lastone Gulume, a lawyer.
The court also faulted the actions of the Committee and RRA to be contrary to the principle of good governance for lack of transparency and accountability, a fundamental principle of the EAC under the Treaty.
The actions of the state agencies were also found not to have been people-centred and market-driven, an operational principle of the EAC under the Treaty.
The court ordered for an accountability of the rent collected by the Committee between October 2013 and September 2017, and the proceeds from the sale of the mall.
UTC’s lawyers, ALP East Africa, had argued that the actions of the Committee and RRA contravened provisions of the EAC Treaty and these agencies did not comply with the internal laws and procedures of Rwanda in undertaking the actions.
The Rwanda AG told the court that the Committee took over UTC Mall “as abandoned property” and that the RRA auctioned the mall to recover taxes – both actions done in accordance with the domestic law – and hence UTC was not entitled to remedies it sought from the court.
But in its judgment, a copy of which The EastAfrican has seen, the First Instance Division ruled in favour of UTC on all issues, finding that the reference was filed within the two months period required by the law.
The court also held that the AG was properly sued in a representative capacity.