Ugandan firms run to EA Court of Justice to recover Shs500b from South Sudan

South Sudan argues that no delivery of vehicles was ever made and the guarantees for payment had been issued without due process (Photo | courtes)

Two firms are seeking to recover more than $137m (about Shs500b) from the government of South Sudan, which they accuse of violating contractual obligations and causing losses, according to a civil suit filed at the East African Court of Justice in Arusha, Tanzania.

Lupain Group, with business footprints in South Sudan, Uganda, and Kenya, dealing in automobiles, logistics and petroleum, in September last year, asked the regional Court to order Juba to pay it $92m (about Shs335b), citing breach of two contracts.

In application No 38 of 2020, the firm seeks to recover accumulated debt of $35.5m (Shs130b), which the government of South Sudan reportedly agreed to pay in installments within a year.

In another application No 39 of 2020, the firm seeks to recover $56 (Shs205b) after it was contracted to supply and deliver 600 cars to the government of South Sudan, a contract it says was breached despite procuring all the cars.

At the same court, South Sudan faces another case filed by Kenya-based Yu Sung, which seeks to recover $45.5m for construction services. Lupain Group is represented by Ochieng Opiyo and Company Advocates. 

Mr Simmons Lupai, the group chief executive officer, declined to speak about matter but his lawyer, Mr Alfred Ochieng Opiyo, in a telephone interview on Wednesday, described the case as “monumental”.

“There is no way a government can issue a sovereign guarantee and fail to honour the same,” he said, noting that his client had been approached for an out of court settlement but no commitment has been reached. The next court hearing is set for September 15.

However, in a written response filled on behalf of the South Sudan Ministry of Finance before the East Africa Court of Justice on June 2, Mr Biong Pieng Koul, a legal counsel for the respondent, said no delivery of vehicles for which the bank guarantees were entered was made, adding that besides the application being time-barred, the guarantees had been issued without due process. 

“No delivery made for the vehicles contracted for under the various contracts entered into between the applicant and respondent for which the bank guarantee [No. 005/2020] was issued to guarantee payment,” a written response reads in part.         

Mr Opiyo also noted that Lupain Group holds a valid bank guarantee No. 004/2020 issued on April 29, 2020, by South Sudan in respect of various transactions and contracts and was overdue for payment.”

“The applicant has presented the bank guarantee for payment, but it has not been honoured and there is every indication that the respondent does not intend to honour its commitment under the said guarantee unless compelled,” he wrote in a Certificate of Urgency.