Discussions

Steady progress of community law in COMESA: Malawi Mobile Ltd v Government of Malawi and MACRA

Steady progress of community law in COMESA: Malawi Mobile Ltd v Government of Malawi and MACRA

26 Nov 2015

William Mwanza, tralac Researcher, comments on the latest ruling by the COMESA Court of Justice and the progressive development of community law in the regional bloc

In recent times, the COMESA Court of Justice has heard some cases that have important implications for the progressive development of community law in COMESA. In 2013, a landmark ruling in the case of Polytol Paints v Mauritius was delivered. In its latest ruling of 20 November 2015, the Court has further clarified its jurisdiction over References brought before it as provided for by the COMESA Treaty. The applicant in this case was Malawi Mobile Limited, a company incorporated under the laws of Malawi. The first respondent was the Government of the Republic of Malawi, and the second respondent was the Malawi Communications Regulatory Authority (MACRA).

Facts of the case

The case was brought to the Court based on a Licence Agreement dated 19th April 2002 between MML and MACRA, through which the company was to provide mobile telephone services in Malawi for a period of 15 years. Under the agreement, MML was required to roll out its network within 12 months from the time the licence was granted. It is understood that by January 2005, MML had not rolled out its network and requested an extension from MACRA for up to 31 October 2005. In communications that followed, MACRA – allegedly induced by the Government of Malawi – eventually revoked the licence in April 2005. The company sued the Government of Malawi and MACRA for breach of a prior agreement reached with the company in March 2005, which extended the roll out period as had been requested. The main contentious issue around this was the claim by the Government of Malawi that it had suspended the Board of MACRA by the time the said extension was granted. Upon hearing the matter, the High Court of Malawi ruled in favour of MML and awarded it US$66,850,000 for loss of profit. The Government of Malawi and MACRA successfully appealed that judgement in Malawi’s Supreme Court of Appeal, which overturned the ruling of the High Court. The company then brought the matter to the COMESA Court of Justice, seeking that the judgment of the Supreme Court be set aside, and that the damages awarded by the High Court be reinstated with interest.

Preliminary applications

At this initial stage of the case, the COMESA Court received preliminary applications from all the three parties as follows:

  1. Firstly, the Government of Malawi argued that the Court does not have jurisdiction to entertain the reference because the alleged breach of contract with MML was not an unlawful act under the Treaty, but was rather an issue covered under Malawi’s national laws. It opined that the jurisdiction of the Court only allows it to consider matters relating to the Treaty and community law – understood as directives and decisions of various organs of COMESA - and not the national laws of a Member State. It also contended that MML had not litigated on the alleged breach of the Treaty in the national court process and hence it had not exhausted local remedies as stipulated by Article 26 of the Treaty. Secondly, the Government of Malawi sought the removal of MACRA as a respondent in the matter.

  2. MACRA also sought that it be removed from the Reference. It argued that although MML could bring the matter to the Court as a legal person, MACRA itself (also a legal person established under the laws of Malawi) could not stand as a respondent in a case before the Court because the Treaty provides that it is only the COMESA Council and Member States that can stand as respondents.

  3. MML sought the setting aside of the judgment of the Supreme Court of Appeal of Malawi and the reinstatement with interest of the judgment of the Malawi High Court due to the fact that the Supreme Court had been irregularly constituted.

Malawi Government’s objection on the jurisdiction of the Court

On its part, MML contended that the Court had jurisdiction to entertain its application under Article 26 of the Treaty since the company was a legal person resident in Malawi and because it had in fact exhausted local remedies as required by that article. It argued that the breach of contract was an unlawful act under Article 6 (f) of the Treaty, namely the fundamental principle of accountability, economic justice and popular participation in development, which Member States undertook to uphold.

In considering Malawi Government’s objection that MML had failed to bring the reference within the provisions of the Treaty, the COMESA Court recalled the objectives and fundamental principles of COMESA as set out in Articles 3 and 6 of the COMESA Treaty. These include inter alia the creation of an enabling environment for foreign and domestic investment and accountability, economic justice and popular participation in development. It found that MML had properly brought the matter to the Court in accordance with these provisions. It also held that as a private party, MML rightly brought the matter to the Court on the basis of Article 26 of the Treaty, which provides access to the Court by natural and legal persons resident in COMESA Member States.

In considering Malawi Government’s objection that the issue at hand was not an unlawful act within the meaning of Article 26, the Court upheld the view of the applicant that at this preliminary stage of the case, it could not go into analysing whether the act allegedly committed was unlawful within meaning provided in the COMESA Treaty as doing so would be going into the substance of the case.

Further, the Court differed with Malawi Government’s restrictive interpretation of the Court’s jurisdiction as provided for in Articles 19 and 23 of the Treaty, respectively. It held that the terms of those articles are “clear, without ambiguity and wider in application”. It upheld the applicant’s view that to adopt such a restrictive approach as suggested by the defendant would preclude the Court from examining the extent to which a Member State is adhering to the aims and objectives of the COMESA Treaty. The Court dispelled fears of a plethora of references finding their way to its doors and indicated that it is ready to entertain references made to it so long as they fall within its jurisdiction as defined by the Treaty, adding that it must have been the intention of the drafters of the Treaty to improve access to justice for residents of COMESA countries when they couched the provisions in the wide terms that they did.

It also held the view that determination of whether some of the fundamental principles in the Treaty have been infringed can only be done by examining the national laws of parties to the Treaty. Hence such examination does not fall outside the Court’s jurisdiction although such application of national laws would vary according to the facts of each case at hand. It relied on its similar reasoning in the Polytol case and also from case law of the East African Community Court of Justice to reach this conclusion.

Further, the Court held that the applicant had exhausted local remedies as required by the Treaty after the delivery of final judgment by the highest court in Malawi – the Supreme Court of Appeal.

Hence, the Court found that it had jurisdiction to hear the case, and dismissed Malawi Government’s preliminary application.

Malawi Government and MACRA’s objection to inclusion of MACRA as respondent

The Court upheld the objection made by MACRA (and supported by the Malawi Government) that MACRA could not stand as a defendant in the case because it was neither the COMESA Council nor a Member State as provided for in Article 26 of the Treaty. Hence, it ordered that MACRA be removed from the reference, and that the Malawi Government would “henceforth appear on its own behalf and on behalf of its corporate organ known as MACRA”.

MML’s application for setting aside of the Supreme Court ruling

The Court dismissed MML’s preliminary application for the nullification of the judgment of the Supreme Court of Appeal of Malawi on the grounds that it had been irregularly constituted. It agreed with Malawi Government and MACRA that the matters raised by MML relate to the substance of the case and so could not be considered at this preliminary stage.

Analysis

From the foregoing, it is clear that the main positive from the Court’s ruling on the preliminary applications is its wide interpretation of its jurisdiction as provided by the Treaty, which allows it to proceed to consider the substantive matters in the present case. This wide interpretation reinforces the right of private parties to access the Court on a varied number of issues, including those that are associated with furthering the objectives and fundamental principles of Treaty in respective Member States.

The fact that the Court found that it had jurisdiction over the matter but at the same time also dismissed the applicant’s preliminary application brings up a peculiar situation that may lead one to think the case cannot proceed to the next stage i.e. consideration of substantive matters. This question is, however, clarified by Rule 2 (1) of the Rules of Procedure of the COMESA Court, which provides that “any matter within the jurisdiction of the Court under the Treaty shall be commenced, proceeded with and disposed of by the Court in accordance with [the rules of the Court]”.

As this present case proceeds to the next stage, a few aspects will be interesting to observe. This is particularly so on the question of which laws apply in the determination of the matter.

As the Court has pointed at in the present ruling, it can consider the national laws of a Member State as it looks to determine whether the latter is upholding its obligations under the Treaty. This brings to bear the important interplay between regional laws of COMESA with the national laws of Member countries.

This interplay is not only in direct or abstract terms but also includes the interaction of regional and national laws in different spheres and the practical benefits that flow from them. For instance, the present ruling ensures that investors can seek redress in the Court after they have exhausted local remedies available to them. This would apply to both domestic investors (as in the present case) or indeed for foreign investors. Of course subject to the substance of each case, the fact that there exists this extra avenue to seek redress serves to improve predictability and hence the confidence of companies as they invest in the COMESA area. The case did not involve a company trading in goods as in the Polytol case, but an investor in an important services sector, namely mobile telephony, which continues to drive development in Africa. If the company had rolled out its services, extra competition would have been introduced into the market, which would have potentially benefitted consumers – including ordinary Malawians and the private sector – through lower tariffs charged by mobile companies.

Viewed in this way, this present case demonstrates an important intersection between investment, services and competition law, and highlights the need for an effective design of regional and national laws in these and other areas within a well-functioning system of community law.

The present ruling of the COMESA Court is important for the progressive development of community law in COMESA. As the case continues, there will be need for more concurrent thought – in COMESA and across the African continent – on how such a well-integrated framework of community law could be designed and developed.

.

Share on