The High Court has dismissed a case brought by Maroola Technology-SMC against the Uganda Investment Authority (UIA) over land in Namanve Industrial Park.
The case stemmed from land at Namanve, which Maroola Technology acquired on lease from UIA in 2012.
According to court records, the lease was renewed in 2016 and again in 2022.
Maroola said it had invested Shs1.8bn in developing the land and later applied for another lease extension from UIA on June 27, 2023.
However, to Maroola’s shock, the board of UIA rejected its lease extension application on August 18, 2023, and allocated the land to another company, Sunbelt Industries Ltd.
Maroola claimed that UIA Director General Robert Mukiza had earlier verbally ordered construction on the land to stop and withdrew the land without following due process or allowing them to be heard.
The company further argued that Mukiza later sat on the same board that rejected the lease renewal request, creating what it described as bias and conflict of interest.
Maroola also said it had appealed the board’s decision to the Minister of Finance but had received no response.
Maroola took the matter to court.
Through their lawyers from Mulindwa Associated & Co Advocates, the company argued that although the lease agreement was contractual, the allocation of industrial park land involved a public function because UIA derives its powers from the Investment Code Act.
“The challenged decision, namely, the rejection of the lease renewal and reallocation of public land within the industrial park, is a public function and not merely a private contractual matter,” Maroola’s lawyers argued.
The company also accused UIA of irrationality and procedural impropriety, saying the authority ignored important factors, including disruptions caused by the Covid-19 pandemic and infrastructure challenges affecting development of the project.
Maroola further argued that the board acted unlawfully by reallocating the land to Sunbelt Industries during the same meeting in which it rejected Maroola’s lease renewal application.
In his affidavit, Mukiza argued that the dispute was already the subject of another case before the High Court and that the new application violated the legal principle against parallel proceedings.
UIA also argued that the dispute was purely contractual and therefore unsuitable for judicial review proceedings.
The authority told the court that Maroola had breached the lease agreement by failing to meet development obligations and that the board had lawfully rejected the lease extension after granting the company a fair hearing.
UIA’s lawyers from Kampala Associated Advocates (KAA) further argued that once the lease expired, the land reverted to the authority and could legally be allocated to another investor.
“The applicant’s lease had already expired,” the respondent argued, adding that Maroola no longer had proprietary rights over the land.
UIA also challenged the application on technical grounds, saying Sunbelt Industries should have been joined to the case because it had already taken possession of the land.
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But Justice Joyce Kavuma rejected those objections from UIA.
She ruled that the earlier case before another judge involved a different issue, namely the Director General’s alleged verbal directive halting construction, while the current application concerned the board’s refusal to renew the lease.
Justice Kavuma also dismissed arguments that the case was defective because Sunbelt Industries had not been added as a party.
“This court again agrees with counsel for Maroola that they are challenging the decision to grant Sunbelt Industries Ltd a lease over their land and therefore, since Sunbelt did not participate in the said decision, their presence in these proceedings is basically not necessary,” she said.
However, on the central issue, Justice Kavuma ultimately sided with UIA.
Justice Kavuma extensively examined whether the dispute qualified for judicial review and concluded that it did not.
“Judicial review is not available to enforce purely private law rights such as rights derived from contract or tort,” she said adding that “where the claim is fundamentally contractual in nature, and involves no allegation of fraud or improper motive or the like against the public body, it would, at least in the absence of very unusual circumstances, be right, as a matter of principle, to limit a claimant to private law remedies.”
She noted that Maroola had failed to show evidence of corruption, bribery, fraud, bad faith, or abuse of statutory power by UIA.
Justice Kavuma said the dispute was fundamentally about whether Maroola had breached the lease agreement.
“In the absence of fraud, corruption, bribery, bad faith or improper or unauthorised purpose or ulterior objective, abuse of statutory power and implementation of unlawful policy by the respondent, it does not seem likely that a decision by a state enterprise to enter into or determine a commercial contract will ever be the subject of judicial review,” she said.
Consequently, she dismissed the application by Maroola against UIA.
