High Court Condemns MTN’s Unilateral Actions for Breaching Contractual Obligations, Engaging in Unfair Competition, and Wrongfully Converting Proprietary Subscriber Data Belonging to VAS Garage Ltd.

Legal brief of VAS Garage Limited v MTN Uganda Limited (Civil Suit 689 of 2022) [2025] UGCommC 73 (21 April 2025)

Decision rendered on 21st April, 2025.

Area of Law: Antitrust law, Telecommunications Law, and Contract Law.

Introduction

This case addresses crucial issues of limitation of actions, contractual breach, abuse of market dominance, and the jurisdictional role of courts in the absence of an operational tribunal under the Uganda Communications Act.

The High Court of Uganda held that MTN Uganda breached its contractual obligations, engaged in unfair competition, and wrongfully converted proprietary subscriber data belonging to VAS Garage Ltd. The Court clarified that raw data is not copyrightable, but databases may be protected through originality or significant investment.

Background of the Case.

VAS Garage provided Value-Added Services (VAS) to MTN customers under Content Provision Agreements signed in 2013 and 2014. As part of a directive from UCC to curb unsolicited messages, MTN introduced a new billing platform and required VAS Garage to hand over its profiled subscriber database.

In 2014 and again in 2015, MTN expired/deleted VAS Garage’s database, allegedly in compliance with UCC’s Do-Not-Disturb (DND) directive. VAS Garage claimed these actions were unlawful, not required by UCC, and were aimed at pushing it out of business.

The plaintiff filed a complaint with UCC in 2018. UCC investigated and ruled in 2018 its favor that MTN had wrongfully expired the database, acted unfairly and directed MTN to reconcile with VAS, but could not enforce monetary compensation. MTN delayed and only partially complied with the directive, leading VAS Garage to seek court enforcement and compensation.

Issues Raised.

1. Whether the suit was barred by limitation.

2. Whether the suit was properly before the court given UCC’s prior ruling.

3. Whether there was a breach of contract by the defendant.

4. Whether the plaintiff was entitled to the remedies sought (damages, interest, costs).

Highlight

The Court clarified that regulatory bodies like UCC cannot award monetary relief unless expressly authorized by law. In the absence of an operational Communications Tribunal, courts retain the authority to enforce rights and award damages.

Resolution of Issues

Issue one: Whether the suit was barred by limitation.

The defendant argued the suit was time-barred since the breach (database deletion) occurred in 2015, and the suit was filed in 2022. However, the Court held that MTN’s partial payment in June 2022 restarted the limitation period.

The court emphasized that if a debtor makes a payment toward the debt, then the cause of action accrues as at that date, essentially restarting the six (6) year countdown in Paragraph 59. Section 22(4) of the Limitation Act provides for acknowledgment or part-payment resets limitation; hence the debt was reset by the defendant.

The issue was answered in affirmative.

Issue two: Whether the suit was properly before the court given UCC’s prior ruling.

The court noted that UCC had already ruled in favor of the plaintiff, but UCC lacked power to award damages and to make decisions on rights of parties. The Uganda Communications Tribunal, which should hear appeals/enforcement, has never been constituted.

The Court therefore rightly assumed jurisdiction. Nowhere in The Uganda Communications Act, 2013 is the Uganda Communications Commission vested with power to grant monetary relief in Paragraph 41.

It was also affirmed in paragraph 46, that if the tribunal intended to handle a particular type of dispute is not yet operational, the courts can step in and provide the relief that the tribunal would have otherwise provided.

The Justice Mubiru thus reinforced the legal principle that courts retain judicial authority when regulatory bodies or tribunals are non-functional. Statutory remedies are exclusive only when the mechanism exists. The court has jurisdiction because the Uganda Communications Tribunal has never been constituted.

UCC’s ruling had no binding legal force for enforcement of monetary claims.

The issue was answered in negative.

Issue three: Whether there was a breach of contract by the defendant.

MTN breached the agreement by deleting the VAS Garage’s subscriber database without notice, failing to bill customers, and acting outside the contract by introducing terms like expiry of services preventing revenue sharing.

The Justice Stephen Mubiru stated in Paragraph 73 that the defendant breached these obligations when it expired/deleted the plaintiff’s keywords and databases as a business decision. Also, the defendant disguised the wrongful cancellation under the ‘expiry’ term that was never part of the UCC Directive nor the 2014 Content Provision Agreement in Paragraph 20.

He also affirmed that MTN misused its dominant position to unfairly drive the plaintiff out of business in Paragraph 21.

This was evidenced by breach of clause 5.1.5 and 6.2 of the Content Provision Agreement, and the deletion violated the plaintiff’s ability to earn and operate

The issue was answered in affirmative.

Issue four: Whether the plaintiff was entitled to the remedies sought (damages, interest, costs).

The Court stated that the plaintiff’s claims for interest, lost income, and general damages were justified, however, damages must not overlap, the Court applied the “totality principle” to avoid double compensation.

The learned Judge stated that damages for unfair competition should be adequate to deter anticompetitive conduct, without resulting in a windfall for an injured plaintiff. When multiple grounds for damages are established, the court must consider if any part of the award overlaps with other remedies in Page 2.

The Court emphasized the legal principle that Courts should balance deterrence and fairness compensating real loss, not creating windfalls. VAS Garage was entitled to damages for lost income, interest on delayed payments, and special damages for marketing losses.

Moreover, the court noted that damage awards should not result in double compensation (totality principle).

The issue was answered in affirmative.

Ruling:

1)The Court found in favor of VAS Garage Ltd.

2) Declared that MTN breached the Content Provision Agreements and engaged in unfair competition.

3) Though UCC decided on the dispute, it lacked power to award monetary relief. Since the Uganda Communications Tribunal meant for appeals was not yet established, the High Court could hear the matter.

4) Conversion was portrayed through deletion of databases, interference with proprietary data.

5) Awarded damages to the plaintiff (specific sums to be determined in further proceedings if not already quantified). Rule of Law Principles Emphasized

Where a specialized tribunal has not been constituted, courts remain the appropriate forum for enforcement of statutory and contractual rights.
Statutory bodies such as UCC must act strictly within their enabling legislation—powers to award monetary compensation must be clearly conferred.
The Court condemned MTN’s unilateral actions as a misuse of its dominant position, reinforcing the principle that private power must be exercised within legal bounds.
The Court reaffirmed that parties are entitled to be heard before their proprietary interests are interfered with.
The principle that partial payments can reset limitation periods ensures fairness and prevents injustice due to technicalities.

Conclusion

The court ruled in the favor of VAS Garage Ltd, holding that, the suit was not time barred, and the High court had jurisdiction to entertain the case.

By Nandawula Sylivia Corporate and commercial Lawyer

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