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A step forward for the free movement of goods in the EAC

A step forward for the free movement of goods in the EAC

In its judgment, the East African Court of Justice made many important findings.

The East African Community was established by the Treaty for the Establishment of the East African Community that came into force in July 2000. The Treaty is implemented through its Protocols amongst which are the Protocol on the Establishment of the East African Customs Union and the Protocol on the Establishment of the East African Community Common market.

On March 26, 2019, the East African Court of Justice delivered its judgment in the case of British American Tobacco Uganda Limited versus the Attorney General of Uganda, Reference No 7 of 2017. The reference was inaugural litigation of the provisions relating to free movement of goods and non-discrimination against goods of partner states under the EAC Treaty.

The Reference filed by British American Tobacco Uganda Limited challenged the enactment and implementation of discriminatory provisions in the Excise Duty (Amendment) Act No 1 of 2017 which imposed a higher excise duty rate on British American Tobacco Uganda Limited’s cigarettes, deemed as imports from Kenya compared to locally manufactured cigarettes.

Decision of Court

In its judgment, the East African Court of Justice made many important findings briefly as follows:

The Court reaffirmed the position that by accepting to be bound by the EAC Treaty provisions with no reservations, Uganda could no longer apply domestic legislation in ways that make its effects prevail over those of EAC law. The Court noted that it is an obligation on State Parties not to enact or sustain laws that completely negate the purpose for which the EAC Treaty was enacted.

The EACJ noted that it was the intention of the framers of the Treaty and Customs Union Protocol to establish the Community as a single economic area characterised by the free movement of goods, and in which goods from any Partner State were not treated as imports.

The Court further noted that every Treaty in force is binding upon the parties to it and must be performed by them in good faith and the actions of the Respondent acting through the Uganda Revenue Authority are likely to jeopardise the achievement of the Treaty’s objectives, thus rolling back the gains of the Customs Union and Common Market that have been realised thus far in the Community.

The EACJ found that the Respondent violated the Treaty and Customs Union Protocol in so far as it sought to implement an administrative measure that discriminated against the Applicant’s goods which amounted to a Treaty infringement and is unlawful.

The Court found that though the challenged law, the Excise Duty (Amendment) Act No 1 of 2017, was not in itself in contravention with the provisions of the EAC Treaty and its Protocols, its misconstruction and implementation by the Respondent did contravene and infringe the provisions of the EAC Treaty and its Protocols.

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