The Citizen (Dar es Salaam)
Bernard James
28 December 2011
The Court of Appeal yesterday gave a reprieve to the East African Development Bank (EADB), after quashing a High Court judgment that had ordered it to pay transport firm Blueline Enterprises $68.5 million (Sh109.2 billion). The total amount in the award, however, was $137 million (Sh219bn) with interest.A panel of three judges ruled that the order against EADB was wrong because the regional financial institution enjoyed absolute immunity from judicial proceedings in relation to disputes arising from the exercise of its lending powers.
The appeal court declared as null and void, the entire proceedings of the High Court that had given rise to the appeal, faulting the lower court for wrongly entertaining the execution proceedings after the EADB had unequivocally pleaded immunity.
Blueline Enterprises Limited sued EADB in 1997 after the bank had placed the business under receivership after its proprietor, Mr John Lamba, failed to pay $1.5 million of a three-year $2.3 million loan extended in 1990.
The parties then mutually consented to resolve the dispute through an arbitrator, who, after hearing both parties, awarded $61.3million to Blueline.
Since then EADB unsuccessfully petitioned the High Court to set it aside on grounds of misconduct by the arbitrator.
The High Court issued an order for Blueline to withdraw $68.5million from EADB’s account at the Standard Chartered Bank in Dar es Salaam.
EADB argued spiritedly that it enjoyed absolute immunity in relation to all of its assets and property against execution or interference by executive, legislative, judicial or administrative action.Under Article 45 of the treaty creating EADB, which was ratified by the United Republic of Tanzania, the bank enjoys immunity from attachment of its assets.
Lawyers who represented EADB – Mr Michel Sullivan, Mr Mabera Marando and Mr Dilip Kesaria â-‘ argued that EADB enjoyed absolute immunity from judicial proceedings in relation to disputes arising from the exercise of its lending powers.
Through its counsel, Mr Gamaliel Fimbo, Blueline defended the earlier decision in its favour, arguing that immunity did not apply to commercial transactions. But the panel of judges said Professor Fimbo’s argument could only hold water when viewed in relation to stated immunity from jurisdiction.
“It cannot be correct when it comes to international organisations which have been granted immunity from legal processes under their constitutive instruments”, the judges explained in a 43-pages decision read on their behalf by deputy registrar Malewo.
The judges overwhelmingly sided with EADB: “We too find that article 44 in as far as the EADB enters a transaction in the exercise of its lending powers as was the case here, provides it with absolute immunity from every form of legal process,” they said. The judges said the need to protect such organisations to safeguard their efficient operations is still the main concern of the member states when it comes to the regulations of their immunities.
“We have no lurking presentiment in holding that via article 44 of the EADB Act, EADB has been granted absolute immunity from all forms of legal process in all cases arising out of the exercise of its lending powers,” they said.
Similarly, they said, EADB, its properties and assets and business premises enjoy absolute immunity under article 45 except when exercising it borrowing powers. In the second ground of appeal, the High Court Judge was being criticized for his restrictive interpretation of article 45 when he held that the appellant’s immunity did not extend to cover its money in the bank because money is not an asset.
But the judges accepted that in ordinary language, the word assets included money, be it case at hand or held in a bank, and therefore EADB’s money held at the Standard Chartered Bank, International House Branch, is part of assets and properties covered in the immunity.
“We think the subject of garnishee order is the type of asset which is meant to be immune from interference because it is incapable of being immunized.
“We have proved beyond any shadow of doubt that the learned High Court judge erred both in law and fact in holding that the appellant’s money at Standard Chartered Bank is not an asset contemplated under article 45.
‘We now hold without reserve that it is an asset and property which is absolutely immune from attachment as far as this appeal is concerned.
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