By: Israel Iya, Legal Assistant & Mutungi Conrad, Associate

1. BACKGROUND OF THE APPEAL

The appellant, a foreign partnership, advanced a loan facility to Simba Properties Investment Ltd, Simba Telecom Ltd, Elgon Terrace Hotel Ltd, and Linda Properties Ltd, the 2nd to 5th respondents, under a Master Term Facility Agreement (MTFA). Upon default, the appellant sought to enforce its rights to acquire shares in the 2nd to 5th Respondent Companies by submitting share transfer documents to the Uganda Registration Services Bureau (URSB).

The URSB initially verified and confirmed that it would register the share transfer documents, thereby creating a legitimate expectation of registration. However, the URSB refused to register the share transfer documents on account that the 2nd to 5th Respondents had commenced arbitration proceedings against the Applicant. Consequently, the appellant filed a judicial review application against the 1st Respondent (a public body), seeking orders of certiorari, mandamus, and prohibition, resulting in Miscellaneous Cause No. 205 of 2021.

2. RULING OF THE HIGH COURT

The High Court struck out the suit because the appellant, being a foreign/unregistered partnership, lacked legal capacity (locus standi) to sue in Uganda under the Partnership Act and Business Names Registration Act; and

3. REASONING OF THE TRIAL JUDGE

The High Court, presided over by Justice Musa Ssekaana (as he then was), held that the law in Uganda is prohibitive of foreign partnerships operating without registration and penalizes the offending party seriously for offending the provisions for registration. The applicants’ status as a partnership registered in South Africa has not been proved to the satisfaction of court.

Justice Musa Ssekaana also held that the decision in Krone Uganda Ltd v Kerilee Investment Uganda Ltd HCMA No. 30 of 2019 was quite distinguishable from the present case since it was a company matter, and the law never required mandatory registration of such companies, unlike in the case before it, where partnerships doing business in Uganda require mandatory registration whether foreign or Ugandan partnerships. A partnership is not, under the law, a juristic person as it is only a compendious name for a collection of individuals or companies who are members of the firm.

The learned judge of the High Court (as he then was) further opined that the existence of a partnership is a matter of law; therefore, foreign partnerships, unlike companies, are not recognized as having an independent legal personality and therefore cannot operate or sue in Uganda without first registering under thePartnershipAct and the Business Names Registration Act. According to Justice Ssekaana, partnerships lack corporate personality, and mandatory registration was necessary to protect the public by ensuring transparency and accountability regarding the individuals behind such entities.

Being dissatisfied with the decision of the High Court, the Appellants appealed against the decision and decree of the High Court.

4. THE COURT OFAPPEAL: QUORUM: JCA: ESTHER NAMBAYO, JCA: FREDRIC EGONA NTENDE, & JCA: EVA LUSWAT

The grounds for appeal

i) The trial judge erred in law and fact when he held that a foreign partnership must be registered in Uganda to have the capacity to sue or be sued.

ii) The trial judge erred in law by joining private entities (2nd to 5th respondent) in judicial review proceedings intended to compel a public bod

LEGAL ISSUES

1. Whether a foreign partnership must be registered in Uganda to have the capacity to sue or be sued?

2. Whether the trial judge erred in law by joining private entities (2nd to 5th respondents) in judicial review proceedings intended to compel a public body?

5. JUDGMENT: JCA ESTHER NAMBAYO: LEAD JUDGMENT

Lady Justice Esther Nambayo clarified that Section 4 of the Partnership Act applies only to firms carrying on business in Uganda with a physical presence. Lending money without such a presence does not require registration. She further held that denying the appellants access to court while allowing them to be sued violates Article 21(1) of the Constitution, which guarantees equality before the law. The trial judge therefore erred in striking out the application.

6. CONCURRING: JCA EGONDA-NTENDE

Egonda-Ntende emphasized that neither the Partnership Act nor the Business Names Registration Act governs legal capacity or locus standi. Section 4 of the Partnership Act only prescribes fines for unregistered firms and does not extinguish their legal capacity. Therefore, a South African firm without a business address in Uganda is not subject to the registration requirement.

5. WHY SHOULD THE DECISION BE WELCOMED?

The Court of Appeal has now overturned the position in the Miscellaneous Cause No. 205 of 2021, clarifying that foreign partnerships without a place of business in Uganda are not obliged to register under Uganda’s Partnership Act in order to exercise legal rights, including the ability to sue and be sued. The appellate court emphasized that where a partnership is duly recognized in its country of origin, its legal capacity extends globally, and Uganda must respect that recognition in accordance with principles of private international law and commercial certainty.

6. IMPLICATION

The Court of Appeal decision in Vantage Mezzanine Fund II Partnership v Simba Properties is important because it decisively clarifies that foreign partnerships without a physical presence or registered place of business in Uganda have legal capacity to sue in Ugandan courts. This ruling overturned a prior restrictive High Court position that denied such capacity on grounds of non-registration, which had undermined the enforceability of cross-border commercial agreements.

By affirming that lending or investing from abroad does not amount to “carrying on business” locally requiring registration, the Court of Appeal has removed a major legal obstacle for foreign investors and lenders operating in Uganda. This creates more certainty and confidence for cross-border financing, allowing foreign entities to enforce their contractual and security rights in Uganda without excessive local regulatory burdens.

Further, the decision promotes fairness and access to justice by preventing local parties from strategically denying foreign partners’ standing after previously engaging with them in litigation. It also strengthens the autonomy of arbitration outcomes by limiting the scope for delaying tactics through unnecessary court challenges.

Overall, the ruling is a crucial step in creating a more investor-friendly and commercially practical legal environment, encouraging foreign investment, supporting economic development, and aligning Ugandan jurisprudence with international best practices in private international law and cross-border commerce.

7. CONCLUSION

The Court of Appeal’s decision in Vantage Mezzanine Fund II Partnership v Simba represents a landmark ruling that enhances legal clarity and investor confidence in Uganda. It conclusively affirmed that foreign partnerships, even if unregistered locally, have the capacity to sue and enforce contractual and security rights in Ugandan courts. This shifts away from the prior restrictive stance that hindered foreign investors and complicated cross-border commercial transactions.