MTN Uganda Limited has secured a major legal reprieve after the Court of Appeal slashed damages awarded to Ezee Money Uganda Limited from shs 2.3 billion to shs 300 million in a long-running dispute over alleged business interference and competition practices.
In a judgment arising from Civil Appeal No. 66 of 2016, Justices Geoffrey Kiryabwire, Jesse Byaruhanga Rugyema and John Mike Musisi set aside findings that MTN had breached statutory duties under Sections 53(1) and 56 of the Uganda Communications Act, 2013.
The court, however, upheld MTN’s liability for wrongful interference with contractual relations under common law, meaning the telecommunications company did not entirely escape liability.
The ruling reduces the damages award by shs 2 billion, representing approximately 87 per cent of the original amount.
In the original judgment delivered by the High Court’s Commercial Division in November 2015, Justice Henry Peter Adonyo awarded Ezee Money shs 800 million in general damages and shs 1.5 billion in punitive damages.
The Court of Appeal reduced general damages to shs 200 million and punitive damages to shs 100 million.
Both sums will attract interest at the court rate from the date of the High Court judgment until payment in full.
In the lead judgment, Justice Kiryabwire found that Ezee Money’s business of facilitating financial transactions did not qualify as “communication services” within the meaning of the Uganda Communications Act.
Ezee Money operated a payment platform enabling users to transfer money and pay bills through telecommunications infrastructure.
The company had sought access to MTN’s network to operate its platform using short code 7711 through third-party aggregator Yo! Uganda Limited.
MTN declined to connect Ezee Money through the aggregator, instead requiring the company to agree on commercial terms directly with it.
MTN also had exclusivity agreements with its mobile money agents, which restricted them from serving competing platforms.
Ezee Money argued that MTN’s conduct violated statutory competition protections and damaged its business.
However, Justice Kiryabwire reasoned that relying on telecommunications infrastructure did not transform a payments business into a provider of communication services.
The judge also pointed to testimony by Ezee Money’s chief executive, who acknowledged that the company did not provide communication services, was not licensed to do so and was not regulated by the Uganda Communications Commission.
The court consequently set aside the findings that MTN owed Ezee Money a statutory duty under Section 53(1) and had breached the relevant provisions of the Act.
Despite the favourable findings on statutory competition law, MTN failed to overturn the separate finding that it had unlawfully interfered with Ezee Money’s contractual relations.
The court found that evidence showed MTN had induced Yo! Uganda Limited to terminate its aggregation arrangement with Ezee Money.
Justice Kiryabwire also upheld findings that agents who continued serving Ezee Money had faced harassment, confiscation of their equipment and, in some cases, temporary detention.
The judge held that such conduct went beyond lawful commercial enforcement of contractual terms.
Even if the exclusivity agreements were not expressly prohibited by legislation during the relevant period, the court reasoned that the methods used to enforce them could independently constitute unlawful interference.
The judge therefore maintained MTN’s liability under common law despite overturning the statutory competition findings.
The Court of Appeal also found that the original damages awards were disproportionate to the proven harm.
Justice Kiryabwire noted that the High Court had improperly relied on internet financial reports about MTN’s financial performance that had been rejected in evidence.
The judge said rejected evidence could not properly form the basis for calculating damages.
