MPs: Uganda Did Not Win Shs1.1tn Oil Case

store geneva; font-size: small;”>Recently, treat to the jubilation of all patriotic Ugandans, Attorney General, Hon. Peter Nyombi said the tribunal had ruled against the UK-based oil firm’s contest of Uganda Revenue Authority’s (URA) decision to tax their $1.45b transaction with Tullow Oil.

“On April 3, 2013, the Arbitral Tribunal issued its decision to the effect that the Tribunal doesn’t have jurisdiction to hear the tax matter,” said Nyombi during a press briefing in Kampala on April 5.

“This is such great success given that it was the country’s first line of defence contending that the Tribunal didn’t have jurisdiction of handling such a case,” he added.

Nyombi said the Tribunal therefore dismissed all the core tax claims in which Heritage challenged the assessment of Capital Gains Tax on the sale to Tullow of Heritages’ interest in Blocks 1 and 3A in Uganda on July 26, 2010.


However, MPs on the Legal Committee of Parliament said the matter had been referred back to Uganda, according to a statement made by Nyombi about the status of the Uganda vs Heritage Oil case on Tuesday.

Nyombi in his statement said the court ruling meant “if the imposition of taxes on Heritage amount to the change of tax law in Uganda and its implications and whether Government reasonably with consent withheld or delayed its consent to the transaction between Heritage and Tullow Oil.”

The statement, according to top legal brains in the committee including lawyers Abdu Katuntu, Winfred Nuwagaba, Fox Odoi among others did not call for any celebrations since court decided for the case to be brought back to Uganda.

The Shadow Attorney General, Abdu Katuntu noted that no arbitration tribunal (London Court) can cancel a court judgment.

However, Nyombi maintained the document could not be given provided to all MPs but the Speaker of Parliament and Committee chairman, Stephen Tashobya.

Members of the legal committee expressed concern over the confidential clauses in the oil arbitration cases in London.

The MPs argue that the office of the Attorney General was given tax payers money to go and defend the country in London and therefore the public should be in position to access the judgment.

MPs including Abdu Katuntu, Paul Mwiru, Sam Otada and Chrispus Ayena among others said the Attorney General should come out and explain to the public why they decided to make a public award confidential.

Uganda has already recovered the Sh1.1 trillion taxes.

In London, URA argued Heritage Oil owed US$435 million in capital gains tax from the US$1.45 billion sale. But Heritage Oil disputed this assessment.

The case had already been heard by the Uganda Tax Appeals tribunal, which ruled in favour of the Government.

In 2011, URA boss Allen Kagina said she expected the Uganda ruling to have a considerable impact on the outcome of London court case.

But Paul Atherton, Heritage’s chief financial officer was in 2011 quoted as saying: “We instigated arbitration in London as provided for in the PSAs [production sharing agreements] as we consider this to be the appropriate avenue and that process is ongoing”

He added: “We will also continue to vigorously pursue all legal forums open to us against this fundamentally flawed ruling.”

George Boden, a Campaigner at Global Witness had earlier warned: “If Heritage Oil win this case and avoid paying tax, there will be a deep sense of injustice in Uganda for many years to come.”

According to Nyombi, “the Tribunal held the issues of the taxability of the transaction were both non-arbitrable and beyond the scope of the arbitration clause and that in any event, the decision of the component Tax Appeals Tribunal of Uganda is binding.”

He further noted: “The Tribunal ruled that Heritage cannot continue to allege that the government of Uganda knew that no tax was due or could not reasonably have thought that no tax was due.”

Nyombi, however, observed the Tribunal decided that it has jurisdiction over the additional non-tax claims by Heritage.

He assured, “any further information will be communicated to the public in due course in accordance with the United Nations Commission for International Trade Law Arbitration Rules, 1976 governing the matter.”

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