THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA SITTING AT KAMPALA
(COMMERCIAL DIVISION)
MISCELLANEOUS APPLICATION No. 1177 OF 2021
5 (Arising from Civil Suit No. 0528 of 2021)
MAERSK AGENCY UGANDA LIMITED …………………………… APPLICANT
VERSUS
1. DERRICK MUNYWEVU }
10 2. LUTON ELECTRICAL DEALERS LIMITED } ……… RESPONDENTS
Before: Hon Justice Stephen Mubiru.
RULING
a. Background.
15
The applicant is a transport and logistics company incorporated and carrying on business in
Uganda. It is the subsidiary of A.P. Moller-Maersk, an international shipping and logistics
company. Sometime during the month of November, 2020 the 1st respondent contracted the
applicant to transport the 2nd respondent’s cargo from Liverpool, England to Uganda. The 1st
20 plaintiff provided the respondent with all the required shipping documents and paid the requisite
clearance and transport charges upfront. Due to alleged lapses on the part of the respondent, goods
that were supposed to have been cleared at the port of Mombasa during the month of January,
2021were not cleared until sometime during the month of May, 2021 resulting in over four months’
delay. Thereafter the applicant company retained the goods it its custody claiming shs. 4,219,798
25 as storage charges and US $ 9,599.95 as additional costs incurred for port storage. The respondents
sued the applicant for breach of contract and wrongful detainer of the goods seeking recovery of
general and special damages, the costs of the suit and an order for the release of the goods. The
applicant then filed this application disputing the jurisdiction of this court.
30 b. The application.
The application is made under the provisions of section 98 of The Civil Procedure Act and Order
9 rules 3 (1) (a), (g), 2, 3, 4, 5, and 6 of The Civil Procedure Rules. The applicant seeks a
1
declaration that this Court is not vested with jurisdiction over the dispute. The applicant contends
that the terms and conditions of the contract of carriage, as contained in the bill of lading, provided
that it was to be “governed by and construed in accordance with English Law and all disputes
arising hereunder shall be determined by the English High Court of Justice to the exclusion of the
5 jurisdiction of the courts of another country.” The parties having bound themselves to the exclusive
jurisdiction of the English High Court of Justice, this court was divested of jurisdiction.
c. Affidavit in reply
10 By the 1st respondent’s affidavit in reply, it is averred that the contract of carriage was between the
applicant and the 2nd respondent. The 1st applicant is not a party thereto. Furthermore, the
consignment contains a vehicle belonging to a one Denise Kavuma, who is not a party to the
contract of carriage and has cleared all taxes due in respect of that vehicle. The applicant filed the
application out of time and without having filed a notice of intention to defend the suit. An
15 interlocutory judgment was entered and the suit had been fixed for formal proof on 2nd October,
2021 before another Judge, when the applicant brought to the attention of court the existence of
this application. The application is only meant to delay trial of the case and should be dismissed.
d. Submissions of counsel for the applicant.
20
M/s ENSAfrica Advocates on behalf of the applicants submitted that the court cannot disregard
exclusive jurisdiction clauses in international commercial contracts. Parties to international
commercial contracts have contractual freedom to choose the applicable law and jurisdiction for
the resolution of their disputes. Parties should be held to their contracts and the court cannot re-
25 write terms in the contract on their behalf. In clause 26 of the bill of lading, the parties not only
chose the law applicable to their contract but they also unequivocally submitted to the exclusive
jurisdiction of the English High Court of Justice. The applicant has a genuine intention to proceed
before the English High Court of Justice. The respondents have not advanced any reason justifying
a departure from the exclusive jurisdiction clause. The application was timeously filed within the
30 period allowed by the rules for filing a defence. Computation of time excludes the day of service
2
of summons and the plaint upon the applicant. The summons should be set aside and the suit
demised with costs to the applicant.
e. Submissions of counsel for the respondents.
5
M/s Kampala Tax Advisory Centre-Legal Department on behalf of the respondents submitted that
this court retains the discretion, despite the exclusive jurisdiction clause, to exercise jurisdiction
over the dispute. The clause is contained in a standard from contract the terms of which were pre-
determined by the applicant. The parties to the contract are all domiciled in Uganda. The goods
10 are in the custody of the applicant in Uganda. It would be inconvenient for both parties to seek a
remedy in a foreign jurisdiction. The Courts in Uganda apply principles of English common law.
The cargo in question is a groupage consignment that comprises goods of third parties not party to
the shipping contract. The applicant having been served with summons on 1st September, 2021
the application filed on 15th September, 2021 was out of time. The applicant not having filed a
15 notice of intention to defend the suit, an interlocutory judgment was entered against it on 1st
October, 2021 which has never been set aside. The application should be dismissed with costs and
the suit be fixed for formal proof.
f. The decision.
20
According to Order 9 rule 3 (1) (g) of The Civil Procedure Rules, a defendant who wishes to
dispute the jurisdiction of the court, may apply to the court for a declaration that in the
circumstances of the case, the court has no jurisdiction over the defendant in respect of the subject
matter of the claim or relief or remedy sought in the action. The ground raised is that exclusive
25 jurisdiction over the subject matter of this suit is vested with the English High Court of Justice.
a. Whether the application was filed out of time.
According to Order 9 rule 3 (1) (a) and (g) of The Civil Procedure Rules a defendant who wishes
30 to dispute the jurisdiction of the court in the proceedings on any ground has, within the time limited
for service of a defence, apply to the court for an order setting aside the summons or service of the
3
summons on him or her and for a declaration that in the circumstances of the case the court has no
jurisdiction over the defendant in respect of the subject matter of the claim or the relief or remedy
sought in the action. Order 8 rule 1 (2) of The Civil Procedure Rules provides that where a
defendant has been served with a summons, he or she shall, unless some other or further order is
5 made by the court, file his or her defence within fifteen (15) days after service of the summons.
Section 34 (1) (a) of The Interpretation Act states that in computing time, a period of days from
the happening of an event or the doing of any act of thing shall be deemed to be exclusive of the
day in which the event happens or the act or thing is done. The applicant having been served with
10 summons on 1st September, 2021 the time allowed to filing the application elapsed on 16th
September, 2021. That happens to be the day the application was filed. I therefore find that the
application was filed within the time allowed by the rules.
b. Whether by failure to give notice of intention to defend the proceedings the
15 applicant submitted to the jurisdiction of this court.
In the first place, a defendant who seeks relief from the court pending an application to challenge
jurisdiction submits to the jurisdiction of the court (see Aelf MSN 242, LLC (a Puerto Rico limited
liability company) v. De Surinaamse Luchtvaart Maatschappij N.V. D.B.A. Surinam Airways
20 [2021] EWHC 3482 (Comm); [2021] WLR(D) 643]). A useful test is whether a disinterested
bystander with knowledge of the case, would regard the acts of the defendant (or his advocate) as
inconsistent with the making and maintaining of a challenge to the validity of the writ or to the
jurisdiction (see Sage v. Double A Hydraulics Limited [1992] TLR 165). The Sage case was a case
of what one might call common law waiver, the doing of an act inconsistent with maintaining a
25 challenge to the jurisdiction. Such a waiver must clearly convey to the claimant and the court that
the defendant is unequivocally renouncing his right to challenge the jurisdiction, and the
application of a bystander test is plainly apt. For example in Deutsche Bank AG London Branch v.
Petromena ASA [2015] 1 WLR 4225), applying the disinterested bystander test, the court regarded
the issue of a summons seeking an extension of time, in the period when there was no extant
30 challenge to the jurisdiction, as an act inconsistent with the maintenance of such a challenge. The
challenge to the validity of the writ therefore failed.
4
The timing of the conduct alleged to constitute a submission to the Court's jurisdiction is important.
If the conduct took place before an application contesting the Court's jurisdiction was intimated or
issued, then it is more likely to be an unequivocal submission to the jurisdiction; if the relevant
conduct occurred whilst there was a pending application to contest the Court's jurisdiction or a
5 reservation of the right to do so, then it is unlikely, perhaps very unlikely, to constitute a submission
to the jurisdiction (see Zumax Nigeria Ltd v. First City Monument plc [2016] EWCA Civ 567;
[2016] 1 CLC 953, para. 44-51). Conduct motivated to forestall the entry of or the setting aside
of a default judgment is not inconsistent with an intention to contest jurisdiction (see Winkler and
another v. Shamoon [2016] EWHC 217 (Ch), para. 48; [2016] WLR (D) 101).
10
In the instant case, the applicant company on 10th December, 2021 filed an application seeking to
set aside the default judgment entered against it on 1st October, 2021 for failure to file a defence
within the time specified by the rules. This was three months after it had filed the current
application on 16th September, 2021. Since Misc. Application No. 1700 of 2021 was filed while
15 there was a pending application to contest the Court's jurisdiction, albeit without a reservation of
the right to do so by filing a notice of intention to defend the proceedings, that of itself cannot be
said to be an unequivocal act of submission to the jurisdiction of this court.
However, Order 9 rule 3 (1) of The Civil Procedure Rules requires a defendant who wishes to
20 dispute the jurisdiction of the court in the proceedings on any ground to “give notice of intention
to defend the proceedings” and within the time limited for service of a defence, apply to the court
for an order setting aside the summons or service of the summons on him or her and for a
declaration that in the circumstances of the case the court has no jurisdiction over the defendant in
respect of the subject matter of the claim or the relief or remedy sought in the action, or such other
25 order. Filing and service (on the plaintiff) of a notice of intention to defend the proceedings will
not be construed as a submission to jurisdiction since the defendant is clearly reserving its right to
challenge jurisdiction. In the instant case, whereas the application challenging jurisdiction was
filed timeously, the applicant did not give notice of intention to defend the proceedings. The
question then is whether that omission should be construed as a submission to the jurisdiction of
30 this court.
5
Whether a defendant’s conduct amounts to a submission to jurisdiction is a question of fact in each
case. The question is whether the defendant’s conduct demonstrates an unequivocal, clear and
consistent intention to submit to the jurisdiction of the court. If a party’s conduct clearly and
unequivocally signifies a submission to jurisdiction, it is doubtful whether it can necessarily be
5 salvaged by a mere reservation. Even the filing of a jurisdictional challenge may not suffice if the
challenge is fundamentally inconsistent with the nature of the defendant’s acts. The test to be
applied in determining whether any particular conduct amounts to a submission to the jurisdiction
was considered in SMAY Investments Ltd. v. Sachdev [2003] 1WLR 1973 at p.1976, thus;
10 A person voluntarily submits to the jurisdiction of the Court if he voluntarily
recognises, or has voluntarily recognised, that the Court has jurisdiction to hear and
determine the claim which is the subject matter of the relevant proceedings. In
particular, he makes a voluntary submission to the jurisdiction if he takes a step in the
proceedings which in all the circumstances amounts to a recognition of the Court's
15 jurisdiction in respect of the claim which is the subject matter of those proceedings.
The effect of a party's submission to the jurisdiction is that he is precluded thereafter
from objecting to the Court exercising its jurisdiction in respect of such claim. Whether
any particular matter, for example an application to the Court, amounts to a voluntary
submission to the jurisdiction must depend upon the circumstances of the particular
20 case.
There will be an effective waiver, or a submission to the jurisdiction, only where the step relied
upon as a submission to the jurisdiction, cannot be explained, except on the assumption that the
party in question accepts that the court should be given jurisdiction. If the step relied upon,
25 although consistent with the acceptance of jurisdiction, is a step which can be explained also
because it was necessary or useful for some purpose other than acceptance of the jurisdiction, there
will be no submission. The representation derived from the conduct of the party said to have
submitted must be capable of only one meaning.
30 A party’s submission to jurisdiction is evinced by its unconditional filing of a defence (see Rashida
Abdul Karim Hanali and another v. Suleimani Adrisi, H. C. Misc. Civil Application No. 9 of 2017
and Miruvor Ltd v. Panama-Globe Steamer Lines SA [2007] 1 HKLRD 804), a failure to file a
prompt jurisdictional challenge, lack of protest against the court assuming jurisdiction over the
parties, or if an unequivocal step has been taken which cannot be interpreted as consistent with a
6
challenge to the jurisdiction, particularly where there has been no reservation of rights such as
filing or contesting applications in the suit, e.g. contesting a summary judgment application and
filing a striking out application. Submission is established where a party has taken a clear and
unequivocal step that is incompatible with the position that the High Court of Uganda does not
5 have jurisdiction.
In the instant application, the question is whether failure to give notice of intention to defend the
proceedings constitutes a failure to file a prompt jurisdictional challenge and therefore a
submission to the jurisdiction of the court. A reading of Order 9 rule 3 (1) of The Civil Procedure
10 Rules shows that a proper jurisdictional challenge requires the filing of both a “notice of intention
to defend the proceedings” and “an application for a declaration of lack of jurisdiction,” all within
the time allowed to serve a defence. The conjunction “and” is used as a function word to indicate
connection or addition especially of items within the same class or type. If the legal consequences
or conditions specified by a statute are to occur simultaneously, the coordinating conjunction “and”
15 is placed between the last two enumerated options. In contrast, if the legal consequences or
conditions may or may not occur simultaneously, the exclusionary conjunction “or” is placed
between the last two alternatives. If the alternatives are mutually exclusive, the word “either” is
placed before the first alternative and the exclusionary conjunction “or” between the last two
alternatives.
20
Since the ordinary rules of interpretation construe the word “and” when used in statutes, rules,
laws or bye-laws conjunctively rather than disjunctively, the implication is that the requirement of
both aspects of the provision has to be satisfied to avail the benefit. Giving notice of intention to
defend the proceedings should be undertaken before, together with or simultaneously with filing
25 an application for a declaration of lack of jurisdiction. In order to challenge the court’s jurisdiction,
a defendant must have filed a notice of intention to defend the proceedings within the time
permitted under the rules. Failure by the defendant to file a notice of intention to defend the
proceedings before or simultaneously with filing the challenge the court’s jurisdiction, will be
deemed a submission to the jurisdiction of the court. By that omission, the applicant submitted to
30 the jurisdiction of this court.
7
c. Whether the exclusive jurisdiction clause should be enforced.
An “exclusive choice of court agreement” means an agreement concluded by two or more parties
that designates, for the purpose of deciding disputes which have arisen or may arise in connection
5 with a particular legal relationship, the courts of a specified country or one or more specific courts
of the specified country to the exclusion of the jurisdiction of any other courts. In the instant case,
clause 26 of the bill of lading states as follows;
For shipments to or from the U.S. any dispute relating to this bill of lading shall be
10 governed by U.S. law and the United States Federal Court of the Southern District of
New York is to have exclusive jurisdiction to hear all disputes in respect thereof. In all
other cases, this bill of lading shall be governed by and construed in accordance with
English law and all disputes arising hereunder shall be determined by the English High
Court of Justice in London to the exclusion of the jurisdiction of the courts of another
15 country. Alternatively and at the Carrier’s sole option, the Carrier may commence
proceedings against the Merchant at a competent court of a place of business of the
Merchant.
An exclusive choice of court agreement that forms part of a contract is treated as an agreement
20 independent of the other terms of the contract. The validity of the exclusive choice of court
agreement cannot be contested solely on the ground that the contract is not valid. The choice of
forum clause fixes in advance where a case will be heard, thus reducing the forum shopping. The
court or courts so designated in an exclusive choice of court agreement has jurisdiction to decide
a dispute to which the agreement applies.
25
When faced with a suit brought in breach of an exclusive jurisdiction clause in favour of another
forum, the starting position is that the court will stay its proceedings unless the plaintiff is able to
show “strong cause” or “strong reasons” (such as bias or countervailing circumstances) why he
should be allowed to breach his promise to sue exclusively in another forum (see Global Partners
30 Fund Limited v. Babcock & Brown Limited (in liq.) and others [2010] NSWCA 196). There is
therefore a presumption in favour of a stay of local proceedings where the parties have entered
into a foreign exclusive jurisdiction clause with the presumption only rebutted where exceptional
8
circumstances are shown by the plaintiff. Another means by which the courts strive to uphold
exclusive jurisdiction clauses is by taking a liberal construction of them.
The task of the court in deciding jurisdiction is usually to identify the forum in which the case can
5 be suitably tried for the interests of all the parties and for the ends of justice (see Spiliada Maritime
Corporation v. Cansulex Ltd, The Spiliada [1987] 1 AC 460; [1986] 3 All ER 843; [1986] 3 WLR
972). Consideration should be given as to which court is most cost effective, practical and
convenient for the potential dispute. The court has to determine whether, prima facie, there is some
other available forum in which it is more appropriate for the case to be tried. In this regard, the
10 burden is on the defendant to show that there is such a more appropriate forum. Upon this burden
being discharged, the court will ordinarily grant a stay unless in the circumstances of the case
justice demands that a stay should nevertheless not be granted. However, an exclusive jurisdiction
clause imposes a contractual obligation to sue in the nominated court and should not be easily
evaded by mere appeals to post-dispute convenience. Matters of convenience or connection are
15 generally of little relevance in an application to enforce a foreign exclusive jurisdiction clause.
Case law with respect to exclusive jurisdiction clauses reflects important policy considerations,
relevantly, that parties should be held to their contractual bargains and the resolution of disputes
arising from contractual arrangements should occur in a coherent and consistent manner and as
20 expeditiously and efficaciously as possible. This suggests that the fewest different jurisdictions
should be involved in resolving the fewest number of separate proceedings. This spirit is reflected
in Article 6 of the Hague Convention on Choice of Court Agreements, June 2005 (to which Uganda
is not a party and whose scope specifically excludes purely domestic cases as well as disputes
involving consumers or employees, family matters, personal injury, and real rights, among others)
25 which provides that a court in a Contracting State to the Convention must decline jurisdiction when
confronted by an exclusive choice of court agreement designating the courts of another member
state to the Convention. On its face this provision would seem to preclude arguments for avoiding
enforcement of a foreign exclusive jurisdiction clause based on convenience such as the residence
of the parties and the location of evidence.
30
9
Consequently the proper approach to the construction of clauses agreeing jurisdiction is to construe
them widely and generously (see Donohue v. Armco Inc [2002] 1 Lloyd's Rep 425 at [14]; [2001]
UKHL 64). Whether a dispute falls within one or more related agreements depends on the intention
of the parties as revealed by the agreements (see Satyam Computer Services Ltd v. Upaid Systems
5 Ltd [2008] 2 All ER (Comm) 465, at [93]; [2008] EWCA Civ 487). The clause should be
understood in a transitive sense, that is, that each party promises to submit claims within the clause
to the specified forum (see Austrian Lloyd Steamship Company v. Gresham Life Assurance Society
Limited [1903] 1 KB 249 and Continental Bank v. Aeakos SA [1998] 1 WLR 588 at p.592). A
stipulation that the parties agree to be bound in all things by the jurisdiction and decision of the
10 courts of a particular country has been held decisive (see Royal Exchange Assurance Corporation-
v. Sjotorsakrings Aktiebolaget Vega [1902] 2 KB 384 394; Euromark Ltd v. Smash Enterprises
Pty Ltd [2013] EWHC 1627 (QB); Bremen v. Zapata Off-Shore Co. 407 U.S. (1972) and Kirchener
& Co. v. Gruban [1909], Ch.413). The effect of an agreement prorogating a foreign jurisdiction is
to confer on the domestic court a discretion to stay the domestic proceedings (see The Fehmarn
15 [1958] 1 WLR 159).
Where parties have bound themselves by an exclusive jurisdiction clause, effect should ordinarily
be given to that obligation unless the party suing in the non-contractual forum discharges the
burden cast on him by showing strong reasons for suing in that forum (see Raytheon Aircraft Credit
20 Corporation and another v. Air Al- Faraj Limited [2005] 2 EA 259; The Fehmarn (1957) 1 Ll.L.R.
511 and, on appeal, (1957) 2 Ll.L.R. 551; The Eleftheria (1970) p.94; The Makjefell (1975) 1
Ll.L.R. 528 and, on appeal (1976) 2 Ll.L.R.29; and The Adolf Warski (1976) 1 Ll.L.R. 107 and, on
appeal, (1976) 2 Ll.L.R. 241 and Aratra Potato Co. Ltd. and another v. Egyptian Navigation Co.
(the “El Amria”), [1981] 2 Lloyd’s Rep. 119). There must be a good reason why the parties should
25 not be held to the bargain that they freely made.
A slightly different approach has been taken in Uganda. Any instrument purporting to oust its
jurisdiction must do so in clear and uncertain terms. Where the parties have not only chosen foreign
law to govern their agreement, but have unequivocally submitted to the exclusive jurisdiction of
30 the foreign Courts, the jurisdiction of the High Court is ousted (see Uganda Telecom Ltd v. Rodrigo
Chacon t/a Andes Alpes Trading, H. C. Misc. Application No. 37 of 2008). The fact that the
10
agreement was negotiated, performed and possibly breached in Uganda is immaterial (see
Sebagala Electronic Centre v. Kenya National shipping Lines (1997-01) UCLR 389; Wissam v.
Bharti Airtel Limited, H.C. Civil Suit No. 1028 of 2017). The High Court though jealously guards
its jurisdiction such that even where exclusive jurisdiction conferred to a foreign court, the High
5 Court has discretion whether or not to order stay of action (see Larco Concrete Products Ltd v.
Transair Ltd [1987] HCB 40; [1988-90] HCB 80). The court will not only consider whether or
not the parties have unequivocally submitted to the jurisdiction of a foreign court, but also whether
it is proper and just for the court where the proceedings are brought to entertain the suit.
10 The High Court will suspend or dismiss proceedings to which an exclusive choice of court
agreement applies unless;- (a) the agreement is null and void under the law of the chosen court;
(b) a party lacked the capacity to conclude the agreement under the laws of Uganda; (c) giving
effect to the agreement would lead to a manifest injustice (for example where the plaintiff can
show that it would “lose” substantive or procedural rights under the laws of Uganda, where there
15 is no equivalent under the law of the country of the designated court) or would be manifestly
contrary to the public policy of the courts in Uganda; (d) for exceptional reasons beyond the control
of the parties, the agreement cannot reasonably be performed; or (e) the chosen court has decided
not to hear the case.
20 The distinction between “manifest injustice” and “public policy” is that the concept of manifest
injustice is concerned with the interests of a particular individual, while the concept of public
policy deals with the interests of the public at large. With regard to the public policy exception, it
is critical for the party seeking to invoke the exception to: (i) articulate a clear public policy that
will be contravened, (ii) demonstrate how it is “highly probable” that such policy would be
25 contravened, and (iii) show how the contravention would be “manifest,” i.e. clear or extremely
serious. This Court may proceed with the case under these exceptions only in unusual
circumstances, and with the greatest circumspection. These exceptions should not be invoked on
the speculative possibility that something undesirable might happen if the choice of court
agreement is honoured. A threshold level of reasonable certainty that an unacceptable result will
30 result is required.
11
That the injustice must be manifest is intended to underscore the caution with which these
exceptions should be invoked. The result must be incontrovertibly unjust from the perspective of
the law and policy of Uganda. The result of failure to exercise jurisdiction also must be a serious
injustice as well. Mere inconvenience is not a ground for refusal to suspend or dismiss the suit. In
5 other words, the issue is not whether giving effect to a choice of court agreement leads to injustice
as a matter of law; whether the injustice is “manifest” is a matter to be interpreted in light of the
traditional force given to the term by the Courts in Uganda. It means that the injustice or violation
of public policy which would result from the decision in the particular case to give effect to the
choice of court agreement is not an arguable violation, but must be one which is definitely
10 recognisable as such (see Dicey, Morris & Collins on the Conflict of Laws, 15th Ed at [41] - that
the public policy exception “is to operate only in exceptional circumstances”).
It is not in doubt that in the instant case that the parties not only chose foreign law to govern their
agreement, but also unequivocally submitted to the exclusive jurisdiction of the foreign Court. The
15 key question in this application therefore is whether there is a “strong cause,” or there are “strong
reasons” or countervailing circumstances why the respondents should be allowed to breach their
promise to sue exclusively in that forum. This Court is obliged to make a double check. First, the
court must ascertain that giving effect to the agreement in this specific case would lead to the
mentioned consequence, i.e., it would lead to manifest injustice or would be manifestly contrary
20 to the public policy. Second, the threat of violation of these two legal institutions is not only
hypothetical but is highly probable.
Avoiding a foreign choice of court agreement may be premised on the fact that the plaintiff would
suffer a disadvantage or injustice through application of a different choice of law by the foreign
25 designated court. Manifest injustice would cover the exceptional case where one of the parties
would not receive a fair trial in the foreign state’s court, perhaps became of bias or corruption or
where there are reasons specific to that party that would preclude the plaintiff from bringing or
defending proceedings in the chosen court. Part of the respondents’ argument in essence is that
giving effect to the agreement would lead to a manifest injustice since all the parties to the contract
30 are all domiciled in Uganda, and the goods are in the custody of the applicant in Uganda. It would
12
therefore be inconvenient for both parties to seek a remedy in a foreign jurisdiction yet the Courts
in Uganda apply principles of English common law.
The court is more inclined to hold the parties to their agreement where it is evident the clause is
5 contained in a fully negotiated business to business agreement, than when the dispute involves a
non-negotiated standard contract in which one of the parties was potentially disadvantaged. The
courts will frown upon standard inclusion of a forum selection clause in a contract when it is highly
foreseeable that the other party will face considerable obstacles in bringing a suit.
10 For example in Petersen v. Boeing Co., 715 F.3d 276, prior to departing for Saudi Arabia, Petersen
was required to sign a preliminary employment agreement. That agreement did not contain a forum
selection clause. On arrival in Saudi Arabia, however, he was forced to sign a second employment
agreement, which he was not given time to read and which he was told he must sign or else return
immediately to the United States at his own expense. This agreement contained a forum selection
15 clause requiring any contractual disputes to be resolved in the Labour Courts of Saudi Arabia.
Petersen signed the second agreement without reading it, as he was instructed to do by his
employer.
Petersen's passport was then confiscated; he was effectively imprisoned in his housing compound
20 under miserable living conditions; and his work environment was marked by rampant safety and
ethics violations. When he attempted to resign and return to the United States, his employer refused
to return his passport for a period of nearly three months. During his time in Saudi Arabia, Petersen
contracted an upper respiratory infection as a result of his living conditions and was permanently
maimed as a result of receiving inadequate surgical treatment for an Achilles tendon tear, which
25 he would have had treated in the United States had he been permitted to leave Saudi Arabia.
When he finally returned to the United States (after the intervention of the United States Consulate
in Jeddah), Petersen brought suit against Boeing and BISS alleging breach of contract as well as
several statutory and common law claims. In addition to his Complaint, his submissions to the
30 district court included a sworn affidavit claiming that (1) he was not financially capable of
traveling to Saudi Arabia in order to institute proceedings against his employer; (2) he would be
13
subjected to harsh conditions and internal travel restrictions if he were somehow able to return to
Saudi Arabia; and (3) the forum selection clause was foisted on him through fraud and undue
pressure. He also submitted a report from the United States Department of State tending to
demonstrate that (1) he would not be legally permitted to travel to Saudi Arabia; (2) he would not
5 in any event be able to obtain a fair trial in Saudi Arabia; and (3) his employer could detain him in
Saudi Arabia for the entire duration of any legal proceedings. The district court nonetheless
dismissed the entire lawsuit without a hearing under Federal Rule of Civil Procedure 12 (b) (3) for
improper venue, holding that the forum selection clause was enforceable.
10 On appeal the Court observed that under the applicable federal law, there were three reasons a
forum selection clause may be unenforceable: (1) if the inclusion of the clause in the agreement
was the product of fraud or overreaching; (2) if the party wishing to repudiate the clause would
effectively be deprived of his day in court were the clause enforced; and (3) if enforcement would
contravene a strong public policy of the forum in which suit is brought. The court found in that
15 case that Petersen had provided specific evidence sufficient to demonstrate that he lacked the
resources to litigate in Saudi Arabia and thus court found he would be wholly foreclosed from
litigating his claims against Boeing and BISS in a Saudi forum. Petersen plausibly alleged that the
majority of his witnesses would be American. He named at least 16 such witnesses, including other
Boeing/BISS employees who experienced similar conditions during their time in Saudi Arabia and
20 United States-based recruiters working for Boeing/BISS. The court finally found that the forum
selection clause's inclusion in the employment agreement was obtained via fraud or overreaching
by taking undue advantage of Petersen's vulnerable position as a newly-arrived employee in Saudi
Arabia and was therefore unenforceable. Therefore, the district court abused its discretion by
dismissing on the basis of the forum selection clause.
25
In the instant application, clause 26 of the bill of lading is a “hybrid” or “asymmetric” clause. The
consignee and consignor are restricted to suing in a particular jurisdiction while the carrier retains
the right to commence proceedings in any court of competent jurisdiction i.e. at a court of the place
of business of the consignee or consignor. Such clauses are normally negotiated where there is an
30 imbalance of negotiating power between the parties as it clearly leaves one party in a more
favourable position than the other. While exclusivity is imposed on the consignee and consignor,
14
the carrier retains non-exclusivity. Non-exclusive jurisdiction will, in principle, provide for
disputes to be heard in the courts of a particular jurisdiction but without prejudice to the right of
one or other of the parties to take a dispute to the courts of any other jurisdiction if appropriate.
5 Manifest injustice usually exists where the choice of court agreement is concluded or the exclusive
jurisdiction clause is inserted in some unfair circumstances or where one party will receive unfair
treatment before the chosen court. For example, one party has a stronger bargaining power than
the other. Sending a commercial party off to a distant foreign country to litigate is normally
different in terms of burden than ordering an individual customer to do so. There is manifest
10 injustice that results if the plaintiff, owing to the expenses and burdens of individual litigation,
cannot afford to litigate his or her valid, but tiny, individual claim in a foreign jurisdiction. It is
clearly contrary to public policy to immunize local subsidiaries of large corporations from
proceedings taken in courts of convenience of their individual customers, by allowing them to oust
the jurisdiction of the High Court through exclusive jurisdiction clauses. When enforced in
15 exceptional situations such as this, such clauses seriously jeopardise the customer’s rights by
prohibiting any effective means of litigating. It is evident that the cost of litigation before the High
Court of justice in England will in all probability exceed the value of the subject matter of the
dispute between the parties to an extent that is in all probability prohibitive on the part of the
respondents, so as to have the effect of denying them an effective means of litigating the dispute.
20 The respondents would be effectively deprived of their day in court were the clause enforced.
On the other hand, when a defendant acknowledges receipt of summons but does not file a notice
of intention to defend the proceedings together with an application within the specified period, he
or she will be taken to have submitted to the jurisdiction of the court. The position in the event of
25 failure to respond to the suit is that the court having satisfied itself that it has jurisdiction over the
claim, it will enter a default judgment against the defendant. The court in the instant case entered
a default judgment against the applicant on 1st October, 2021. Once default judgment has been
entered it is too late to contest jurisdiction, unless it can be shown that service was never effected
on the defendant.
30
15
That aside, a foreign court will have jurisdiction over a defendant when he or she is voluntarily
present (whether temporarily or permanently) in the foreign country at the time the action was
commenced (see Adams v. Cape Industries [1990] Ch 433 (CA) at pp. 518-20 and 530). The
rationale for this rule is that a person who is present in the foreign country has the benefit /
5 protection of the law applicable in that country, must “take the rough with the smooth, by accepting
his amenability to the process of its courts.” Submission to a foreign jurisdiction may be express
or implied. Where a person becomes a partner in a foreign firm with a place of business within the
jurisdiction of a foreign court, and appoints an agent resident in that jurisdiction to conduct
business on behalf of the partnership at that place of business, and causes or permits these matters
10 to be notified to persons dealing with that firm by registration in a public register, he or she does
impliedly agree with all persons to whom such a notification is made, i.e. the public, to submit to
the jurisdiction of the court of the country in which the business is carried on in respect of
transactions conducted at that place of business by that agent (see Blohn v. Desser [1962] 2 QB
116). There is no material in the pleadings to suggest that when it entered into the contract the
15 applicant was in some way acting as agent for A.P. Moller-Maersk, UK. It entered into the contract
entirely as a company incorporated and carrying on business in Uganda.
For all the foregoing reasons, I find that the applicant, by conduct, submitted to the jurisdiction of
this court; the exclusive jurisdiction clause in the bill of lading is unenforceable in the
20 circumstances of this case, and therefore the application is devoid of merit. Consequently the
application is dismissed with costs to the respondents.
Delivered electronically this 4th day of March, 2022 ……Stephen Mubiru…………..
Stephen Mubiru
25 Judge,
4th March, 2022.
16
