KAMPALA, Uganda The Commercial Division of the High Court has ordered MTN Uganda to pay shs 11.3 billion to VAS Garage Limited for breach of contract, conversion, and unfair competition.

This was after MTN Uganda unlawfully expired the VAS Garage Limited’s subscription database under the guise of implementing a Uganda Communications Commission (UCC) directive in 2014 when VAS Garage Limited entered into a content provision agreement with MTN Uganda to supply mobile content subscribers through UCC short codes 666 and 0800206666 for purposes of designing, developing and implementing a content management platform.

According to court documents, in VAS Garage Limited’s case, during or around the year 2012, it approached MTN with a proposal for entering into a content provision agreement to allow VAS Limited to provide telecom value-added services, and MTN made it clear that the only condition that had to be met for a direct connection was to sign a content provision agreement, which was shs. 82,000,000 as the minimum gross revenue per month.

Upon fulfilling the above conditions, during 2013, MTN Uganda executed a content aggregation which was renewed in 2014 and thereafter remained in force for an intermediate time, unless terminated in writing by either party. VAS garage limited thus developed and deployed unique content services
by investing in advertising through numerous radio and television stations, thereby profiling MTN’s customers to consume the unique content by either party.

By way of email, MTN Limited communicated to the plaintiff to the effect that the Uganda Communications (UCC) had started a drive to ensure that the customers did not receive unsolicited SMS; if they did, they should be able to block such SMS from being delivered to them in the future in order to meet that directive, and MTN was required to implement an SMS do not disturb solution at their expense, allowing customers to block unsolicited SMS by registering in MTN’s database via USSD, SMS, or customer care service.

In its defence, MTN contended that the court lacks jurisdiction ratione personae due to forum shopping and that it is frivolous and vexatious to VAS Garage Limited by its own will, made the choice of forum for resolution of the dispute, that UCC heard the complaint on the submissions of both parties on 27th March, 2028, delivered a decision, and VAS Garage on 6th of February 2028 purported to commence arbitration allegedly on account of breach of contract and non-payment of shs 22,673,940,585.

MTN held that the court ordered that the arbitral proceedings be terminated on grounds that the arbitral tribunal lacked jurisdiction and, on its part, challenged the decision of the UCC by way of judicial review but was not successful.

MTN Uganda further argued that during November 2014, the UCC issued a directive to all telecommunications service providers to implement what is commonly referred to as the ”Do Not Disturb” directive and that the purpose of the directive was to stop the receipt of unsolicited messages by telecom customers, and implementation of the DND directive required a revision of all content provision agreements with content customer subscriptions to ensure compliance with the UCC regulatory requirements, and that the cleanup and amendment of contracts was done across the board for all content providers and was not targeted to VAS Garage Limited.

Justice Steven Mubiru stated that despite the VAS garage storytelling-style pleadings, valid causes of action were disclosed, and the claims were not barred by limitation due to part-payment that reset the limitation period

The Court emphasised that the UCC lacked jurisdiction to grant private monetary relief, permitting recourse to the civil court. It was found that MTN’s unilateral actions breached the Content Provision Agreement, constituted unfair competition, and led to substantial loss of income

Mubiru awarded VAS Garage Shs. 1.26 billion in interest on unpaid invoices, Shs. 300 million for marketing expenses incurred during the disputed period, Shs. 8.37 billion as loss of income for 29 months of disrupted services, and Shs. 1.39 billion in general damages for conversion and unfair competition.

The judgement by Justice Mubiru also included a certificate of costs for two legal counsels and ordered interest of 19 per cent per annum on all monetary awards from the date of judgement until full settlement.

This brought the total judgement award to Shs 11,328,293,339, excluding the interest which continues to accrue.