10 February 2013

Uganda: NSSF Gains Upper Hand in Sh60 Billion Alcon Case

The Supreme Court on Friday handed the National Social Security Fund (NSSF) a new lease of life in its ongoing battle to save about Shs 60bn of pension funds from being handed to Alcon International Limited.

The money is compensation for the termination of a contract to build the Social Security House, or what is now known as Workers' House. After losing on three previous court rulings over this particular case, NSSF won on all the three grounds it brought before the Supreme Court, gaining a much needed advantage as this suit heads back to the High Court, where it is expected to be finally disposed of.

The first of the three grounds that NSSF won was that there was absence of cause of action, while the second touched on the award being obtained illegally or contrary to public policy. In the third ground, NSSF argued that there was an error in referring the matter for arbitration. Making his comments on the first ground, Chief Justice Benjamin Odoki, who wrote the lead judgement, said Alcon Kenya, which signed the contract with NSSF, erred in handing over the assignment to construct the Social Security House to Alcon Uganda Limited without the Fund's formal consent.

"I am of the view that the cause of action is derived from the contract and therefore it is the Alcon International Limited Kenya that can make a claim in this regard," he wrote.

"There must be offer and acceptance between the parties, and there must be an intention to create legal relations. All these require both parties to be aware of whom they are contracting with."

Tumusiime, Kabega, and Company Advocates, the lawyers representing Alcon, had earlier argued that "there is a lot of evidence to corroborate the evidence of the assignment of the construction contract [possibly to Alcon Uganda]."

The lawyers further noted that: "Despite the fact that the company in Uganda did not have the track record in construction, the Managing Director of the Kenyan company was the same person who moved to Uganda and started the company here. therefore, as far as experience and resources are concerned, it was the same human being who had that experience in Kenya who was translating that experience that was needed in Uganda."

By winning the first ground, NSSF found it easy to win the second and third because as Odoki put it, "The identity of Alcon is at the crux of the issue because according to [NSSF], Alcon fraudulently misrepresented itself not only at the contracting stage but also during the performance of the contract and throughout the subsequent legal proceedings."

Attention now shifts to the High Court, which, in 2004, upheld an earlier arbitration award to Alcon. Odoki has called on the High Court to expeditiously dispose off this case. This will bring an end to a case that is almost in its fifteenth year.

Should NSSF lose in the High Court, the Fund says the money at stake translates into a 2% interest on every worker's savings. Alcon won a compensation award of $8.8m in 2002, with an annual interest of 6% until all the monies were fully paid.

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