UGANDA TELECOM LIMITED Vs. MTN UGANDA LIMITED S.C.C.A No. 1/ 2015

BACKGROUND

The Appellant, Uganda Telecom Limited (UTL) and the Respondent, MTN Uganda being limited liability companies licensed to carry out telecommunications business in Uganda, entered into an Interconnection Agreement that took effect on 1st February, 2001. The sole purpose of this agreement was to allow for termination of traffic in each other’s networks and the parties were obliged to pay to each other interconnection fees. In 2006, the Government of Uganda gave permission to the Government of South Sudan to use the country code +256 by GEMTEL Limited, a telecommunications operator in South Sudan. The Appellant subsequently entered into an Interconnection Agreement with GEMTEL, allowing GEMTEL to use the prefix 477 which was originally reserved for Northern Uganda.
In 2008, the Respondent invoiced the Appellant for interconnection fees for the period of March to December 2007. However the Appellant paid only half of the invoiced amount and refused to pay the other half. The Appellant argued that the Respondent had wrongly applied the rate of UGX 100 which was the charge per call of local traffic instead of USD 0.50 by virtue of GEMTEL’s use of the code +256 477. The Appellant denied liability contending that such traffic, through the use of the code +256 477, was international traffic and not local traffic.
The Respondent having instituted High Court Civil Suit No. 297 of 2009 in the Commercial Court Division, succeeded on their claim for the recovery of the money in question. The trial judge held that the traffic to GEMTEL from the Respondent via code +256 477 was not international but locally terminated within the meaning of the Interconnection Agreement. The Appellant was dissatisfied with the judgment and appealed to the Court of Appeal. The Court of Appeal dismissed the appeal for lack of merit hence this appeal to the Supreme Court.
The Respondent was represented by Kampala Associated Advocates at all three stages of this suit while the Appellant was represented by Didas Nkurunziza & Co. Advocates.

Grounds of Appeal at the Supreme Court

The Memorandum of Appeal contained two grounds;
1. That the learned Justices of Appeal erred in law and in fact by misconstruing and failing to subject the evidence on record to adequate inquiry and re-appraisal when they held that the applicable rate for traffic from the Respondent to GEMTEL in Southern Sudan was UGX 100 under the Interconnection Agreement.

2. That the learned Justices of Appeal erred in fact when they held that code +256 477 was for the Northern towns of Arua, Lira and Gulu.

Core Submissions
Appellant:
The Appellant had argued that the rationale for establishing the rates for telecommunications traffic is cost-based on the infrastructure used to relay traffic and not code-based. It was further argued that the article in the Interconnection Agreement relating to international transit traffic refers to “a third party operator” and not a “third party network”. In that regard, the Appellant submitted that the third party operator in this matter was GEMTEL Limited and that it was licensed to operate and give telecommunications services in South Sudan by the Government of South Sudan. That GEMTEL did not operate in Uganda. According to the Appellant, therefore, the traffic that went to GEMTEL in South Sudan was therefore international traffic and not local traffic. It was therefore submitted by the Appellant that such traffic was chargeable as international and not local traffic. The Appellants faulted the lower court for finding otherwise.

Respondent:
In opposition to the above submissions, Counsel for the Respondent submitted that the Appellant’s Counsel was attempting to persuade this court to re-appraise the evidence on a second appeal so as to disagree with the findings of the High Court and the Court of Appeal in relation to the question whether the telephone traffic that terminated on the Appellant’s local Ugandan code +256 477 which had been lent to GEMTEL, was international traffic or local traffic. It was further argued that since the Court of Appeal had ably addressed their minds to the Interconnection Agreement and effectively executed their duty regarding the re-evaluation of evidence, that there was therefore no basis for interference with the judgment of the Court of Appeal.

Decision of the Court
On 12th September 2017, the decision of all the Appellate judges was that the Appeal held no merit and that as such, it ought to and was henceforth dismissed with costs to the Respondent. Briefly, their reasoning was that;
• The Court agreed with the Appellant’s contention that the Court of Appeal judges failed to subject the evidence on record to adequate inquiry and re-appraisal. Nonetheless, their decision is not misconstrued but entirely supported by the evidence on record, although they used a short cut to arrive at the same without subjecting all the material evidence that was adduced before the learned trial judge to fresh scrutiny and evaluation.

• The Appellate judge held that since it was acting as a second appellate court in this matter, it could not interfere with findings of fact by the High Court and the Court of Appeal unless they were not supported by evidence. That the code +256477 was a code for Northern Uganda which was extended to Southern Sudan. The Appellant allowed GEMTEL to use +256477 which was based in Yei which is in Southern Sudan. It was a temporary arrangement awaiting acquisition by South Sudan of its own Country Code from the International Telecommunications Union.

• The Court found that indeed, GEMTEL was a third party operator based in Southern Sudan but was allowed to temporarily use the UTL code +26 477 that was meant for Northern Uganda. The calls were locally terminated because they terminated on the same local Ugandan code. Therefore International transit rates could not apply.

• In conclusion, the appellate judges upheld the decision of the Court of Appeal supported by the submissions of Counsel for the Respondent, Kampala Associated Advocates. Subsequently, having found no merit in the appeal, it was dismissed with costs to the Respondent.

Significance of the Judgment

• The Judgment has provided unfettered guidance to companies providing telecommunication service on computation of interconnection fees. Interconnection Agreements ought to provide clear distinction of what amounts international or local telephone traffic with specific consideration to interconnection rates applicable to origin and termination of telephone calls.

• The judgment further established that rates for telecommunications traffic shall not be cost-based on the infrastructure used to relay traffic but it shall be code-based on the origin and termination of the call and ultimately the specific rate prescribed in the Interconnection Agreement entered into by the parties involved, if any.

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