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The Court of Appeal has reduced damages awarded against MTN Uganda Limited in a dispute with payment services company Ezee Money Uganda Limited from 2.3 billion shillings to 300 million shillings. The Court upheld a finding that the telecommunications company wrongfully interfered with Ezee Money’s contractual relations.
In a judgment delivered on Thursday in Civil Appeal No. 66 of 2016, a panel of Justices Geoffrey Kiryabwire, Jesse Byaruhanga Rugyema and John Mike Musisi set aside findings that MTN had breached statutory duties under the Uganda Communications Act, 2013, but maintained its liability under the common law.
The court reduced general damages from 800 to 200 million shillings and punitive damages from 1.5 billion to 100 million shillings. The ruling follows a November 2015 judgment by the High Court Commercial Division, presided over by Justice Henry Peter Adonyo, which found in favour of Ezee Money and awarded it 2.3 billion shillings in damages.
The dispute arose from MTN’s refusal to connect Ezee Money’s mobile money platform through third-party aggregator Yo! Uganda Limited, its withdrawal of post-paid telecommunications services to Ezee Money and exclusivity arrangements with mobile money agents.
Ezee Money argued that MTN’s actions restricted competition and undermined its ability to operate in Uganda’s mobile money market. According to court records, Ezee Money required access to MTN’s network to operate its payment platform through short code 7711.
However, MTN declined to facilitate the connection through Yo! Uganda Limited, insisting that Ezee Money negotiate commercial terms directly with the telecommunications company.
MTN also withdrew Ezee Money’s post-paid telecommunications services, citing its failure to meet credit assessment requirements.
The case further involved allegations that MTN’s exclusivity agreements with mobile money agents prevented them from serving competing platforms. Evidence presented before the High Court indicated that some agents who continued working with other operators were harassed, had their equipment confiscated or were temporarily detained.
In its appeal, MTN challenged the High Court’s interpretation of the Uganda Communications Act, arguing that Ezee Money was a payment services provider rather than a licensed communications services operator and therefore could not claim protection under the law’s competition provisions.
In the lead judgment, Justice Kiryabwire agreed with MTN on this issue. He found that facilitating financial transactions through telecommunications infrastructure did not automatically make Ezee Money a provider of communication services within the meaning of the Act.
The judge held that Sections 53(1) and 56 of the Uganda Communications Act could not establish the statutory duty that Ezee Money claimed MTN had breached. The court consequently set aside the High Court’s findings that MTN had violated those provisions.
However, the appellate court rejected MTN’s challenge to the finding that it had wrongfully interfered with Ezee Money’s contractual relations.
Justice Kiryabwire observed that the alleged harassment of agents, confiscation of their equipment and inducement of Yo! Uganda Limited to terminate its aggregation arrangement with Ezee Money went beyond the enforcement of commercial agreements.
The judge noted that even if the exclusivity agreements were not expressly prohibited by legislation during the period in question, unlawful methods used to enforce them could still attract liability.
“The means used to enforce them,” including harassment, confiscation of property and physical restraint of agents, were unlawful, the judgment found.
The court also upheld the finding that MTN occupied a dominant position in the market.
The judgment noted that the company had admitted to this position in the joint scheduling memorandum, although the issue became less decisive after the statutory competition claims were rejected.
On damages, the court acknowledged evidence of substantial harm to Ezee Money’s business. The company reported a 79 per cent drop in transactions, the inactivation of 65 per cent of its service centres, increased operating costs and reputational damage following the disruption of its business arrangements.
However, Justice Kiryabwire faulted the High Court for relying on internet financial reports about MTN’s performance that had been rejected as evidence. He held that such material could not properly form the basis for assessing damages.
The appellate court found the original awards disproportionate to the harm established and reduced the total damages to Shs 300 million, comprising 200 million shilling in general damages and 100 million shillings in punitive damages.
The court further ordered that interest on both awards would accrue at the court rate from the date of the High Court judgment until payment in full.
Given the outcome of the appeal, MTN was awarded half of the taxed costs in both the Court of Appeal and the trial court.
The decision draws a distinction between statutory competition protections under the Uganda Communications Act and liability under common law for wrongful interference with contractual relations.
Although the court rejected Ezee Money’s claim that MTN had breached the cited statutory provisions, it found that the alleged unlawful conduct surrounding the company’s commercial relationships was sufficient to sustain liability under common law.
By URN
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