IS IT LAWFUL FOR THE PARLIAMENT OF UGANDA TO NEGLECT ITS CONSTITUTIONAL DUTY OF ENACTING THE GUARANTEED ROYALTY ACT? 25 March 2014 at 23:02 This note is will attempt to answer the above question of fact by reference to the relevant collated facts and figures supportable with evidence, and inferences arising from those facts. The note will also try to answer the question of law,by applying the relevant legal principles. The leading authorities (case law) will be cited in this note and the relevant legal principles that emerge from them. Introduction 1. The present 1995 Constitution of Uganda(i.e, Supreme Law of the land) guarantees individual land owners the right to lease their property, and protects their right to receive royalty payments based on alease agreement. The relevant provisions of the legislation are not in doubt. The present Supreme Law of the Land for Uganda (1995 Constitution) makes clear that these are prescriptive provisions and expressly says there is a duty imposed on Parliament to enact laws that regulate the sharing of royalties arising f rom mineral exploitation. Uganda or the Pearl of Africa is naturally endowed with plenty of privately owned lands in its different regions,but its Parliament is yet to comply with its constitutional obligation of enacting a Royalty legislation to operationalise Article 244 of the present 1995Constitution of Uganda, and ensure that that there is statute that guarantees statutory minimum royalty protections and mandates that lessors (individual land owners) receive a minimum royalty payment of 12.5%. 2. This fact is not in dispute that since 1995,when the present Constitution of Uganda was promulgated and subsequently amended, to-date members of Uganda’s Parliament have not yet fulfilled its Constitutional obligations to enact laws that: (a) regulate the sharing of royalties arising from the utilisation of minerals, (2) govern the transfer of mineral rights from one owner to another and (3) that enforce the rights of individual land owners to receive royalty payments based on a lease agreements. The Constitution clearly indicates that Parliament is under a mandatory legal duty to make laws that enforce peoples’property and mineral rights. The relevant fact put forward, relating to the legislature’ failure to act, is correct and not in doubt. 3. There is no any reasonable excuse or justified ground whatsoever, for the NRM-dominated 9th Parliament,to continue acting in breach of its constitutional obligations Under Article 244 of the Constitution that requires enactment of royalty legislation. The conduct can be perceived and interpreted as a continuing act that unlawfully infringes others’ property rights protected by Article 26, land ownership rights protected by Article 237 and mineral rights guaranteed by Article 244 of the present 1995 Constitution of Uganda, currently in force. This is a case where the victims or affected individual land owners, are dissatisfied as to Parliament’s continuous inaction and failure to act. 4. The omission or failure to perform a legislative duty incumbent upon all elected public representatives in the 9th Parliament of Uganda, has evidently registered a negative effect of harming the legitimate rights and interests of the peoples, the Legislators are required to represent and serve.The public complainants have suffered real injustice and financial hardship, in consequence of a failure of Parliament to provide a legislative service it is empowered to provide under the Constitution. 5. From a strategic business perspective, the unfulfilled legal requirements in Article 244 of the Constitution of Uganda, can be viewed as revenue sharing under supply chain management. From the view point of operations management, revenue sharing is a supply chain approach in which the seller or retailer’s revenue is shared between it and its supplier, in return for the supplier providing the product at a lower cost. Revenue sharingis one of the supply chain strategies. Supply chain management is an approach in which all members of the supply chain work together, coordinate their activities, and share information. Many organisation around the world, implemented equitable revenue sharing, as a way to increase their profits and indeed there is cogent evidence which shows that revenue sharing produces an increase in profits for both the lessors, suppliers and sellers. 6. Due to absence of the guaranteed royalty legislation, many private owners of lands in Uganda are still denied their right to receive royalty payments based on lease agreements with local and/or foreign companies in the private sector. Currently, revenue collected from natural resources in Uganda is still very low vis-à-vis government expenditure, but can increase if Parliament carries out its obligatory legal duty under Article 244 of the Constitution to enact legislation that guarantees statutory minimum royalty protections and also mandates that lessors (individual land owners) receive a minimum royalty payment of 12.5%. The taxable capacity is still below the required minimum. It is averred that if the Parliament performs its legal obligation under Article 244 of the present Constitution of Uganda, many private owners of lands or mineral estates will be motivated to lease part of their privately owned mineral-rich lands or real estate, to potential investors in the mining or gas sector. According to archived geological and historical data, there are lots of untapped minerals on privately owned estates, for example, there are huge untapped uranium and gold deposits in Kyaggwe County of Buganda Kingdom, discovered by British explorers in the early 1930s. There is so single ethnic region in Uganda, which is not gifted with natural resources. There is an urgent need to exploit those mineral resources to generate the much needed revenue, for purposes of providing basic social services without discrimination and for construction of the missing transport infrastructure, especially in mineral-rich areas. External public borrowing from multilateral organisations has also accelerated the country debt burden, currently at about $6 billion dollars. In 2012, there was a reported cut in donor funds, resulting from the misappropriation and misuse of foreign aid money (taxpayers money), in the appointive ministerial office of the prime minister, with a permanent secretary. The tax base of Uganda is still very narrow, but can be widened by introducing a legal framework, which allows equitable sharing of revenue from natural resources, found beneath privately owned real estates. Currently, there is very low utilisation of minerals, resulting from different issues among which include lack of legislation that protect right of individual land owners, to receive royalties, based on a lease contract with private companies in the mining or drilling sector. There is still too little capacity in the mining and energy sector of Uganda, which means that potential sales, market share and profits are still escaping away. In all the different tribal or ethnic regions of Uganda, there are private owners of lands, which contain vast untapped minerals, including uranium, oil, gold, among others.. Relevant Constitutional Law-making procedure There is a big body of cogent evidence,sufficient to demonstrate a deliberate failure by Parliament of Uganda to perform its legal obligations. There are circumstances where Parliament has failed to exercise its legislative powers, in accordance with the prescribed law-making procedures, set out in, the Constitution. The relevant legislation is not in dispute. Legal compliance is important because organisations must ensure that their practices conform to the Law. The following relevant legal requirements or procedures are not being observed by the Legislature, in respect of enacting a Guaranteed Royalty Act: • Article 2(1) re: ‘Supremacy of the Constitution’ says: “This Constitution is the supreme law of Uganda and shall have binding force on all authorities and persons throughout Uganda.” • Article 244(1)(b) re: ‘duty to enact Royalty legislation’ says: “Parliament ‘shall’ make laws regulating the sharing of royalties arising from mineral exploitation.” • Article 244(2) reads: “minerals and mineral ores shall be exploited taking into account the interests of the individual land owners, local governments and the Government.” • Article 26(1) re: ‘property rights’ says: “every person has a right to own property either individually or in association with others.” • Article 237(3),(a)-(d) re : ‘rights of land owners’ says that land in Uganda shall be owned in accordance with four land tenure systems namely (a)customary (b) freehold (c) mailo and (d)leasehold. • Article 237(4)(a) & (b) says: “ on the coming into force of this Constitution all Uganda citizens owning land under customary tenure may acquire certificates of ownership in a manner prescribed by Parliament and land under customary tenure may be converted to freehold land ownership by registration.” • Article 237(1) re: ‘Land ownership’ says: “Land in Uganda belongs to the citizens of Uganda and shall vest in them in accordance with the land tenure systems provided for in this Constitution.” • Article 237(1)(c) reads: “noncitizens may acquire leases in land in accordance with the laws prescribed by Parliament, and the laws so prescribed shall define a noncitizen for the purposes of this paragraph.” • Article 244(b) says: “Parliament shall make laws regulating the exploitation of minerals.” • Article 244(3) states: “For the purpose of this article, “mineral” does not include clay, murram, sand or any stone commonly used for building or similar purposes.” • Article 91 guarantees the exercise of legislative powers • Article 88(1) states: “The quorum of Parliament shall be one-third of all members of Parliament entitled tovote.” • Article 88(2) says: “the quorum prescribed by clause (1) of this article shall only be required at a time when Parliament is voting on any question.” • Article 89 guarantees voting rights in Parliament • Article 92 re: ‘prohibition on enacting retrospective legislation’ says:“Parliament shall not pass any law to alter the decision or judgment of any court as between the parties to the decision or judgment.” • Article 50(4) says: “Parliament shall make laws for the enforcement of the rights and freedom sunder this Chapter.” • Article 20(2) provides: the rights and freedoms of the individual and groups enshrined in the Constitution shall be respected, upheld and promoted by all organs and agencies of Government and by all persons. • Article 241(1)(a) says: “The functions of a district land board is to hold and allocate land in the district which is not owned by any person or authority.” • Article 239 says: “The Uganda Land Commission shall hold and manage any land in Uganda vested in or acquired by the Government of Uganda in accordance with the provision sof this Constitution and shall have such other functions as may be prescribed by Parliament.” • Article 43 provides that public interest shall not permit any limitations or restrictions on the enjoyment of the rights, beyond what is provided in the Constitution. • Article 288(1) states: “Subjectto articles 264 and 265 of this Constitution, the Constitution of Uganda of 1967 and Legal Notice No. 1 of 1986 as amended, shall, upon the coming into force of this Constitution, stand repealed.” • Article 26(2)(b) states: “no person shall be compulsorily deprived of property or any interest in or right over property of any description except where the following conditions are satisfied: the compulsory taking of possession or acquisition of property is made under a law which makes provision for (i) prompt payment of fair and adequate compensation, prior to the taking of possession or acquisition of the property; And (ii) a right of access to a court of law by any person who has an interest or right over theproperty.” • Article 44(c) says: “there shall be no derogation from the enjoyment of the right to fair hearing.” • Principle XXIX(g) of National Objectives and Directive Principles of State Policy says: it shall be the duty of every citizen to acquaint himself or herself with the provisions of the Constitution and to uphold and defend the Constitution and the law. • Principle XXVIII(i)(b) of National Objectives and Directive Principles of State Policy says: “The foreign policy of Uganda shall be based on the principle of respect for international law and treaty obligations.” The relevant Case Law The English legal system, along with those of Uganda and America and many former British protectorates and colonies which take the English law as their source, is a common law system, which entails using a decision of a judge or courts in a particular case as a guide or precedent for how similar cases should be decided. The relevant precedents in an area are sometimes referred to as case law. Whilst the law has developed through parliamentary legislation, the use of precedents is still of fundamental importance. From time immemorial competent and impartial judges tried to be consistent and to avoid giving judgments which conflicted with precedent - that is, with judgments already made in similar cases. Decision or actions inconsistent with other decisions or actions which involve similar facts or circumstances are categorised as unreasonable, and do indicate gross maladministration. The leading authorities cited in each case law and the relevant legal principles that emerge from those court precedents areas follows: • In Griffith v. Taylor (1956) the court defined royalty as: “a payment of a part or percentage of production under a lease which is to continue throughout the life of the lease is regarded as royalty and a sum certain tobe paid in cash or out of production is regarded as bonus.” • In the Occidental Permian Ltd v. French [2012]the courts defined “royalties as the landowners’ share of production, free of the expenses of production.” • In Renwar Oil Corp v. Lancaster [1955] the courts ruled: “a mineral or royalty interest is an interest in real Estate.” • In Luckel v. White (1990) - “a royalty interest is a subset of a mineral interest and a royalty deed conveys the royalty interest as a fee.” In Comissioner for Railways v Valuer-General[1974] Lord Wilberforce explained this maxim relevant to the property rightsof individual land or real estate owners: “a person entitled to ownership andpossession of land has exclusive rights upwards to the sun and downward to the centre of the earth.” • In R v Shayler [2002] per Lord Hope: “fundamental rights are to remain practical and effective, not illusory.” • In Altman v. Blake (1937) the courts of law established that a mineralestate (i.e., privately owned land containing minerals or oil) consists of fivelegal rights namely (1) the right to develop (the right of ingress and egress(the executive right) (2) the right to lease (3) the right toreceive royalty payments (4) the right to receive delay rentals. (5) theright to receive bonus payments. • In Lewis v. Adams [1998] - “a contract for the transfer of an interestin an oil and gas lease is treated as a real property interest and, therefore,is subject to anti-fraud statutes.” • In Mitchell v Mosley [1914] the courts accepted that land includes subjacent minerals and things inherent in the ground. Land includes that part of the property which is a direct line between the surface and the centre of the earth, such as mines of metals and fuel. • In Bank of California vTaaffethe courts set a precedent relating to forcible entry onto land in these terms: “force in an entry made upon privately owned land in the possession of another, without his orher consent, is illegal.” • In Shell Oil Co. v Ross [2011] the royalty owners, were paid royalties by Shell Oil based on wells located on the lease of their property. Shell admitted at trial that it had made a mistake for a period of several years in calculating the royalties due to the individual land owners, which resulted in underpayments of royalties to the individual land owners. • In R v. Earl of Northumberland [1567] commonly referred to as the“Case of Mines” the courts recognised the Royal prerogative to gold, silver and other minerals. Royalty was derived from the word royal pertaining to the Monarch.In that case the courts of law accepted that the Crown has a prerogative right to minerals and mines in his or her Kingdom; and the the Crown has a claim to valuable minerals or natural resources that are discovered, as well as valuable treasure in his or her territory. • In Taylor v Betterment Properties (Weymouth] Ltd [2014] the British Supreme Court laid down guidelines for rectification of the register in circumstances where a person’sland is wrongly registered or details incorrectly entered in the land registry. • In Rodrigues v Ufton (1894) the court held that the owner of real estate can only bring an action to restrain trespass to his property where the owner has rights to minerals on or under the surface. • In Adamson & Ors v Paddico Ltd [2014]– a private land owner’s appeal was allowed where his land had been wrongly taken by a public body, and incorrectly registered as a town or village green. • In Lewis v. Adams [1998] the courts established a legal principle: “a contract for the transfer of an interest in an oil and gas lease is treated as a real property interest and, therefore, is subject to anti-fraud statutes.” • In Humble Oil and Refining Co. v. Williamsthe Supreme Court held: “a person who seeks to recover from the lessee for damages to the surface has the burden of alleging and proving either specific acts of negligence or that more of the land was used by the lessee than was reasonably necessary.” • In Old Grovebury Manor Farm v Seymour Plant Sales and Hire Ltd [1979]the courts held: “breach of a lease agreement may have serious consequences.” • In Street v Mountford [1985] the difference between a lease and licence was articulated – “the requirements for a lease are exclusive possession of a defined area of land, for a fixed period of time with the intention to create an estate in land, that is, an interest in land that itself which can be assigned or sold. A licence is simply permission to use land but does not confer any interest in land. Exclusive possession for a term under a legal and enforceable agreements or deed will be sufficient. If there is no exclusive possession then the agreement cannot be a lease and must be a licence.” • In OBrien v Bensons Hosiery (Holdings) Ltd(1979) a precedent relating to contractual rights as assets for capital gains purposes was articulated inthese terms: “contractual rights could be assets for Capital Gains Tax purposes and for purposes of capital gains tax,which is charged on the disposal of an asset; and assets are defined in accordance with the declaration that all forms of property shall be assets.” The concept of a contractual right as an asset for Capital Gains Tax (CGT) purposes was already established by the decision in OBrien v Bensons Hosiery (Holdings),which is used as guidance by HMRC and property owners in respect of computing CGT payable or charged on gains realised on the lawful disposal of property. • In Cope v Rowland [1836] a precedent for contract illegal by statute was set by the courts in these terms:“a contract may be expressly forbidden by statute or the prohibition may beimplied.” • In Everett V Williams [1725] contracts illegal by public policy.Contracts are illegal at common law on the grounds of public policy and includecontracts to commit a crime, a tort or a fraud. • In Cope v Rowland [1836] it was established that a contract can beillegal by statute. • In Mayor of Dublin v Hayes (1876) the courts accepted that contractsinvolving fraud or corrupt payments are illegal. • In Fisher v Bridges (1854) the courts ruled: “where a contract isillegal the consequence is that related transactions will also be void.” • In Taylor v Bhail [1996] the courts set a precedent for illegaltransactions: “Clearly a transaction involves reprehensible conduct where itsformation, purpose or performance involves the commission of a legalwrong. By commission of a legal wrong wemeans to include not only the commission of a crime or a civil wrong but alsobreach of a statutory prohibition.” • In Commonwealth Vs John Fairfax & SonsLtd & Ors the case was seeking the prevention of publication of government documents involving huge taxpayers’ public monies and property. The Court held: “but it can scarcely be a relevant detriment to the government that publication of material concerning its actions will merely expose it to public discussion and criticism. It is unacceptable in our democratic society that there should be are restraint on the publication of information relating to government when the only vice of that information is that it enables the public to discuss, review and criticize government action.” • In Waugh v Morris [1873] confirmed that a contract can be rescued ifthe parties are content that, going forward, the contract can be performed in a legal manner within its terms. If this is the case, parties should act promptly to rectify the illegality as soon as they are made aware of it. • In Mayagna(Sumo) Awas Tingni Community v. the government of Nicaragua [2001] the International Court examined the fact that the Nicaraguan government had issued various concessions to foreign companies within the territory traditionally used and occupied by the Awas Tingni Community. Ultimately, the Court found that the government of Nicaragua had violated the rights of the Awas Tingni to judicial protection and the right to property protected by Convention. Specifically, the International Court of law found that Nicaragua had violated the right to judicial protection by not having an effective system through which indigenous peoples’ lands could be delimited, demarcated, and titled. The Court used an evolutionary interpretation of international human rights instruments to determine that theright to property includes the communal property of indigenous communities. The International Court also ruled that until the delimitation and titling of the Awas Tingni community’s land, the State itself must prevent agents of the State or third parties from acting in a way that affects the Awas Tingni community members’ use, value, or enjoyment of the property where they live and carry out their activities. This ruling affirmed the right of indigenous peoples to their lands and resources without State interference, and also asserted the positive obligation of the State to prevent interference by third parties. • In Saramaka People v. the government ofSuriname, the case revolved around the fact that the government of Suriname Govt granted resource concessions to private companies within the territories of theSaramaka People without their consultation or consent. The International Courtfound that Suriname Govt had violated the Saramaka People’s rights, as tribal peoples, to judicial protection and property by granting the logging and mining concessions, and failing to have effective mechanisms to protect them from actsthat violate their rights to property as defined in the Convention. The Court also recognised indigenous peoples’ right to consultation with regard to an ydevelopments within their lands and territories, and requires free, prior andinformed consent [FPIC] with regard to large-scale development projects. • The authorityof R (Alconbury Developments Ltd) vSecretary of State for the Environment, Transport and the Regions [2001] a ministerial orexecutive decision about the utilisation of others’ lands and people’s enjoyment ofproperty was judicially reviewed. • In S v Makwanyane [1995] the courts oflaw established a legal principle that: “international law may be used as toolsof interpretation unless in conflict with the national Constitution and Law.” The relevantInternational Law provisions: • Article 2(d) of United Nations Convention against Corruption[“UNCAC”] defines property as “assets of every kind, whether corporeal or incorporeal, movable or immovable, tangible or intangible, and legal documents or instruments evidencing titles to or interest in such assets.” • Article 17 of the Universal Declaration of Human Rights [“UDHR”] and Article 14 of the African Charter on Human and Peoples’ Rights [“ACHPR”] protect property rights or the right to own property alone and in association with others. Uganda is a signatory to those international instruments. • Article 25 of International Covenant on Economic, Social and Cultural Rights (“ICESC”) states: “nothing in the present Covenant shall be interpreted as impairing the inherent right of all peoples to enjoy and utilize fully and freely their natural wealth and resources.” • Article 1(2) of ICESC says: “In no case may a people be deprived of its own means of subsistence.” • Article 11 ofCovenant on Civil and Political Rights (ICCPR)says: “no one shall be imprisoned merely on the ground of inability to fulfill a contractual obligation.” • Article 13(2) of the UN Convention concerning Indigenous and Tribal Peoples in Independent Countries provides:“The use of the term lands in Articles 15 and 16 shall include the concept of territories, which covers the total environment of the areas which the peoples concerned occupy or otherwise use.” • Article 14(1) of the UN Convention concerning Indigenous and Tribal Peoples in Independent Countries says: “The rights of ownership and possession of the peoples concerned over the lands which they traditionally occupy shall be recognised.” • Article 3(2) of the UN Convention concerning Indigenous and Tribal Peoples in Independent Countries provides: “no form of force or coercion shall be used in violation of the human rights and fundamental freedoms of the peoples concerned, including the rights contained in this Convention.” • Article 32 of United Nations Declaration on the Rights of Indigenous Peoples requires free and informed consent prior to “the approval of any project affecting their lands or territories and other resources, particularly in connection with the development, utilization or exploitation of mineral, water or other resources • International Labour Organisation (ILO),Convention Concerning the Protection and Integration of Indigenous and Other Tribal and Semi-Tribal Populations in Independent Countries (ILO No. 107) • Article 10(c) of UNCA requires State government to publish information including public finance documents • Article 9(2))(b)& (c) of UNCA requires take appropriate measures to promote transparency and accountability in the management of public finances. Such measures encompass, inter alia: timely reporting on revenue and expenditure and a system of accounting and auditing standards and related oversight. • Article 17 (1)of UDHR says: “no one shall be arbitrarily deprived of his property.” • Principle 3 of the UN Basic Principles on the Independence of the Judiciary says: the judiciary shall have jurisdiction over all issues of a judicial nature and shall have exclusive authority to decide whether an issue submitted for its decision is within its competence as defined by law. Discussion Although Uganda or thePearl of Africa is naturally endowed with plenty of privately owned lands inits different ethnic regions, including uranium, oil, gold and many more, itsParliament is yet to enact a Guaranteed Royalty Statute operationalisingArticle 244 of the present 1995 Constitution of Uganda. According to research conducted in some alreadydeveloped countries around the world with a federal system of government, suchas, the United States of America, there are robust federal laws thatprotect the right of private land owners to receive royalty payments basedon the lease agreement. In America, they have the Guaranteed Royalty Act [“GRA”],that guarantees statutory minimum royalty protections and mandates that lessors(individual land owners) receive a minimum royalty payment of 12.5% of all resources, minerals, oil and gas removed from their property. The GRA says that a lease shall shot be valid if such lease does not guarantee the statutorily mandated minimum royalty. The legislation guarantees that the lessor is legally entitled to receive as its royalty 12.5 % of the sales proceeds actually received from the lessee (i.e., extractive or drilling company in the private sector). It was worth noting that America has a federal system of government,based on its different states – It is the same system of governance upon which the country Uganda was founded, according to the present Uganda Independence Act, 1962 [“UIA”], and the 1962 Independence Constitution of Uganda that was overthrown by violent and unconstitutional means in 1966 and got replaced by the 2-man written 1967 Constitution of Uganda, which got repealed and replaced by the current 1995 Constitution of Uganda (as amended) . The country Uganda was founded upon a federal political system, and attained independence in 1962 under a federal system of government. In 1993, before promulgation of the present Uganda’s Constitution in 1995, the Constitutional Review Commission(commonly known as the Odoki’s commission) were traversed the entire country Uganda, widely consulted the different indigenous communities and found that 65% of Ugandans want a federal system of governance of which 97% in Buganda region overwhelmingly chose federalism, but it was excluded after some Constituent Assembly delegates, were allegedly bribed. To-date the restoration federal local governance remains one of the unresolved most contentious national issues in the various ethnic regions of the country, Uganda. The will and right of peoples to self-determination, will prevail. Royalty payment means that for all minerals, uranium, oil and gas substances that are physically produced from the leased premises or lands pooled, unitized and sold, lessor is entitled to receive as its royalty 12.5 % of the sales proceeds actually received from the lessee. For example, way back in 2007, a US jury found Chesapeake Energy liable for $400 million in damages for underpaying royalties to private land owners in the federal State of West Virginia. In the federal state of Pennsylvania alone, royalty payments to private land owners topped $1.2 billion for the financial year 2012-13.. Mineral royalties is a payment to the owner of mineral rights for the privilege of extracting the mineral from the ground based on the lease agreement. The royalty payment is based on a portion of earning from the production and varies according to the type of mineral and the market conditions. Private land owners who have minerals underground, which private mining or fuel companies want to access are often approached with a lease agreement, which allows those private companies to do so while paying royalties to the landowner(s) for the access to those resources. Research conducted around the world reveal that many lawful and enforceable lease contracts between landowners and extractive companies statet hat the landowner is to be paid royalties that are based on the market value of the resources that are taken from the land under which they sit. The royalty clause is the most important clause for the lessor; it is the principle compensation they receive for leasing their property. For example, in 1979, the General Assembly of the federal State Pennsylvania in the U.S, enacted legislation to mandate that lessors receive a minimum royalty of 12.5%of all minerals, oil and gas removed from the property. The legislation is called the Guaranteed Royalty Act [“GRA”]which says that a lease shall shot be valid if such leave does not guarantee the statutorily mandated minimum royalty. The High Court of Uganda or Constitutional Court has jurisdiction to review the acts, omissions and failure to act of any public body, alleged to be contrary to the Law, as well as grant just and equitable remedies within its powers. The available judicial review remedies for the main proposition of illegality (unlawfulness), include a declaratory relief, a mandatory order to compel Parliament to do its legal duty under Article 244(1) of the Constitution of Uganda and/or injunctive relief to stop it acting illegally. Victims or would be victims of actionable breaches of their constitutional or fundamental human rights, have a right to bring proceedings in a competent and impartial court of law. Article 50 (2) of the Constitution states: “any person or organisation may bring an action against the violation of another person’s or group’s human rights.”Any rational and impartial person in possession of the full facts would come to the conclusion that the supreme law-making body of Uganda is acting ultra vires. Our Ugandan Legislators must correct understand and properly manage people’s legitimate expectations and needs, as well as provide the required legislative remedy of enacting the a royalty-sharing legislation, to avoid possible inter-tribal conflict and legal action against the government of Uganda, in international courts of law. All legislators are expected to understand the constitutional requirements of enacting a guaranteed royalty legislation, which guarantees statutory minimum royalty protections and mandates that individual land owners(lessors) receive a minimum royalty payment of 12.5% of all resources,minerals, oil and gas, extracted or removed from their privately owned property, as well as guarantees that a lease of privately owned land (mineral estate) shall shot be valid if such lease does not guarantee the statutorily mandated minimum royalty. There is a big body of case law (i.e., Common Law)relevant to the legal entitlement of individual land owners to receive 12.5 %as their royalty of the sales proceeds actually received from the lessee (i.e.,extractive or drilling company in the private sector). Directly elected Legislators are under a legal obligation to observe all relevant constitutional and statutory provisions, as well as the Common Law, International Law and lawful directions that relate to the performance of their official duties. The noticeable failure of legislators to carryout legal duties incumbent upon them, has badly affected many private owners of mineral estates or lands that contain minerals and gas.Several citizens have time and again, raised a legitimate public concern of absence of an enabling royalty-sharing legislation, but Parliament has failed act, without any reasonable excuse. Among the notable concerned citizens,include His Majesty the King of Bunyoro Kingdom, Omukama Dr. Solomon Iguru Gafabusa, who traveled 200 miles all the way from his capital at Hoima, and presented a written petition to Parliament, on Thursday 31 May 2012,highlighting the absence of the required royalty legislation, and proposed as tatutory minimum royalty payment of 12.5% of the total revenue from all mineral resources or oil extracted from their lands owned by the people of Bunyoro..Statutory requirements are imposed by the legislators (or Members of Parliament). It is the role of Parliament to pass the required royalty statute (Act of Parliament) which then will form part of the national law.The legislative powers vested in Parliament under Article 91 of the Constitution of Uganda mean that it is the supreme law-making body for Uganda. 8. Unlike the legitimate rights and interests of some private land owners infringed or threatened, the interests of the local governments and Govt in Uganda, are already catered for, by receipt of payments levied as different types of taxes, according to the existing tax legislation in Uganda, for example excise duty, personal income tax(or PAYE), sales tax, corporation tax, capital gains tax (CGT) charged under Section 19(1)(a) of Income Tax Act 1997 on gains realised on the disposal of private assets or real estate, among other taxes. Articles 191 and 192 of the Constitution empower local governments to levy, charge, collect and appropriate taxes. Article 17(1) ofthe Constitution says: “It is the duty of every citizen of Uganda to pay taxes.” Land was the first kind of property to be recognised by law, and a property is disposed of as its owner wishes (Ayres, 1999). Article 26(1) of Uganda’s Constitution re: ‘propertyrights’ says: “every person has a right to own property either individually or in association with others.” Land (natural resources) is the source of minerals and oil from the ground (Dumba-Sentamu, 2004). Article 244(3) of the present Constitution of Uganda 1995 states: “For the purpose of this article, “mineral”does not include clay, murram, sand or any stone commonly used for building or similar purposes.” The mineral estate of privately owned land includes all organic and inorganic substances that form a part of the soil. Exceptions wouldbe sand, gravel, limestone, subsurface water, etc. which are normally considered part of the surface estate. In Mitchelllv Mosley [1914] the courts accepted that land includes subjacent minerals and things inherent in theground. Land includes that part of the property which is a direct line between the surface and the centre of the earth, such as mines of metals and fuel. The omission or failure to actby Parliament under Article 244(1) of the Constitution, has had the bad effectof infringing others’ fundamental human rights, particularly property rights protected by International Laws which Uganda ratified, namely Article 17 of the Universal Declaration of Human Rights [“UDHR”] and Article 14 of the African Charter on Human and Peoples’ Rights [“ACHPR”]. In R v Shayler [2002] per Lord Hope: “fundamental rights are to remain practical and effective, not illusory.” In applying that legal test, peoples’property rights must remain practical and not illusory. A property right can also be defined as the exclusive authority to determine how a resource is used, whether that resource is owned by individually individual or in association with others, or held in trust by an institution on behalf of the people concerned. According to the economic definition of Land (natural resources), it means anything provided by nature,under or over the surface of the earth (Todaro, M.1994). In Renwar Oil Corp v. Lancaster [1955] the held: “a mineral or royalty interest is an interest in real Estate.” Where a person privately ownsa piece of land containing minerals or gas, what they in fact own is an estate in the land defined by the physical boundaries and the length of time of their ownership which are set out in the land title deed. The act of legislators not observing legal requirements in Article244(1) of Constitution has resulted in cases of land grabbing and arbitrary deprivation of others’ real property. In Lewis v. Adams [1998] the courts established a legal principle: “a contract for the transfer of an interest inan oil and gas lease is treated as a real property interest and, therefore, is subject to anti-fraud statutes.” Land is can be explained as real property. Property is legally defined in Article 2(d) of United Nations Convention against Corruption [“UNCAC”] which states: “property shallmean assets of every kind, whether corporeal or incorporeal, movable orimmovable, tangible or intangible, and legal documents or instruments evidencing titles to or interest in such assets.” Uganda is a signatory to Article2(d) of UNCAC currently in force. According to the Oxford dictionary the word “property” means things owned, land and real estate. Estates in land can be classified as corporeal and incorporeal hereditaments. A corporeal hereditament refers to a tangible and physical as aspect of land, whereas incorporeal hereditament means intangible rights that are enjoyed in, over or in respect of the land. The failure of Honourablemembers of Parliament, to comply with obligations under Article 244(1) of the Constitution of Uganda is interfering in others’ mineral andland ownership rights guaranteed by Article237(3),(a)-(d) of the Constitution which says that land in Uganda shall be owned, in accordance with four land tenure systems namely (a) customary, (b) freehold, (c) mailo and (d) leasehold. The legal rules of land tenures define how access is granted to rights to use, control and transfer of land as well as associated responsibilities and restraints. Land tenure is the relationship legally and customarily defined among people as individuals or groups, with respect to land ownership. In Comissioner for Railways v Valuer-General [1974] Lord Wilberforce explained this maxim: “a person entitled to ownership and possession of land has exclusive rights upwards to the sun and downward to the centre of the earth.” Land is a source of minerals and it is on land surface that all buildings, facilities and factories stand, and it is the major factor of production (Hardwick, Mead & Khan, 1994). There are circumstances where Parliament is not exercising a legislative power where the Constitution under Article 244(1) set out a particular prescribed procedure to be correctly followed. If the procedure is not followed, this makes the action ultra vires. In this case where the Parliament took an action which is incompatible with the Constitution of Uganda or highest form of the law in the country, its failure to act can be better described as ultra vires. R v London Boroughs Transport Committee, ex p Freight Transport Association Ltd[1991] the courts held that an action can be ultra vires where the public authority has taken an action which is incompatible with a higher legal authority. Due to absence of an enabling royalty-sharing legislation required by Article 244(1) of the Constitution, the public revenue collected from natural resources is still very low vis-à-vis government expenditure. In Occidental Permian Ltd v. French [2012]the court defined royalties as: “the landowners’ share of production, free of the expenses of production.” When minerals are produced from a leased property,the land owner is paid a share of the production income. This money is referred to as a “royalty payment.” A royalty is a percentage share in the proceeds from sale of production from the minerals or oil. Royalties are typically paid to the land owner(s) by the operator that actually extracts the minerals. The amount of the royalty payment is normally specified in the lease agreement. In Griffith v.Taylor (1956) the court set a precedent: “a payment of a part or percentage of production under a lease which is to continue throughout the life of the lease is regarded as royalty and a sum certain to be paid in cash or out of production is regarded as bonus.” The apparent disregard of the constitutional law-making procedure in Article 244 of the Constitution is badly affecting many land owners’ enjoyment of the royalties and benefits from the use of their lands (natural resources), they own individually and communally. The parliamentary failure to act, has denied many real estate owners, access to the royalties and economic use of their property. Leased land is rewarded with rent as its price in the factor market (Mankiw, 2003). In Uganda,tenure by lease is constitutionally-guaranteed under Article 237(d) of the 1995 Constitution, presently in force.Individual or group land owners, have a right to lease part of their property to potential foreign investors in the mining or energy sector. In law, leasehold guaranteed by Article 237(d) of the Constitution of Uganda, means land or property held by a lessee (tenant) for a specified period of time from the land owner (lessor) as a rule at a rent. A person has a Lease if he or she has a right to exclusive control of land for a limited period. A Lease thus consists of ownership of land for a limited period. The legal principle derived from the precedent of Old Grovebury Manor Farm v Seymour Plant Sales and Hire Ltd [1979] is that “breach of a lease agreement may have serious consequences.” Noncitizens or foreign companies are entitled to property rights and lawful acquisition of leases in privately owned real estate with minerals under the surface. Article 237(1)(c) of the Constitution of Uganda reads: “noncitizens may acquire leases in land in accordance with the laws prescribed by Parliament, and thelaws so prescribed shall define a noncitizen for the purposes of this paragraph.” Leasehold protected by Article 237(d) of the Constitution, is the property which is held by a person by virtue of a lease agreement between him or her and the land owner, permitting him/her to hold and use the land for such a period as said in the lease agreement, for a considerable lump sum payable to the private owner of the property and for royalty payments agreed in the lease contract. Land isreferred to as natural resources (Tayebwa, 2007). Government officials are entitled to licence mining and drilling companies, but are not legally mandated to lease or dispose of other peoples’ privately or communally owned tribal lands to foreign investors,without prior and informed consent of the land owners. There is a huge difference between leasing and licensing. In Street v Mountford [1985] the difference between a lease and licence was articulated – “the requirements for a lease are exclusive possession of a defined area of land, for a fixed period of time with the intention to create an estate in land, that is, an interest in land that itself which can be assigned or sold. A licence is simply permission to use land but does not confer any interest in land. Exclusive possession for a term under a legal and enforceable agreements or deed will be sufficient. If there is no exclusive possession then the agreement cannot be a lease and must be a licence.” Investment of noncitizens or foreign companies, which are expected to be located on private lands lawfully acquired by enforceable lease agreements with royalty clauses, cannot be expropriated. Article13 of the 1994 Energy Charter Treaty says that: “investments of investors of a Contracting Party in the Area of any other Contracting Party shall not be nationalized, expropriated or subjected to a measure or measures having effect equivalent to nationalization or expropriation” except where such measure complies with the rules of customary international law in this matter (public purpose, due process, non-discrimination and compensation). There are sufficient laws in Uganda to protect the security of lease tenure for noncitizens or foreigninvestors who wish to work with private land owners to extract and use mineral resources. And it is the same criminal laws that protect the security of tenure for customary, freehold and mailo private land ownerships. In Uganda, Article 27 (1) (b) of the 1995 Constitution says that no person shall be subjected to unlawful entry by others of the premises or property of that person. Section 77 of the Penal Code Act created a statutory crime of forcible entry onto land or any tenement. A court precedent of forcible entry onto land was, set out, in the Judgment of In Bank of California v Taaffe where the courts ruled: “force in an entry made upon land in the possession of another without his consent.” Forcible entry can be legally defined as the crime of taking possession of land by use of physical force or use threats of violence against the land owners. Forcible entry onto land can include using terror to gain entry, as well as compelling by force land owners or occupants, out of their lands by use of violent means or threats of violence, without their prior consent, with due process and without any prior payment of fair and adequate compensation, before the taking of possession of their lands. Forcible entry onto land can be explained as subjecting an individual or a group to unlawful entry by others of their lands or property. In Baxley v.Western Loan & Bldg Co. (1933) the courts held that where there is no force involved in the entry and where the entry is pursuant to a contract between the parties the entry is lawful. Force and threats of force make the entry forcible. Section 225 of the Penal Code Act of Uganda created a statutory criminal offence of excessive use of force by law enforcement officials. Uganda is a party to Article 3(2) of the UN Convention concerning Indigenous and Tribal Peoples in Independent Countries which says “no form of force or coercion shall be used in violation of the human rights and fundamental freedoms of the peoples concerned, including the rights contained in this Convention.” However,there are precedents where excessive Govt against its own people is dealt with by the limbs of international law that kick those in-charge of military command and political leadership. There are already adequate criminallaws to address the problem of illegal evictions, forcible detainer andarbitrary deprivation of property sometimes called land grabbing. Section 78 of the Penal Code Act [“PCA”] forbids forcible detainer ofland or any tenement. Forcible and unlawful detainer of land can be defined as the act of withholding from a lawfully entitled person or group the possession of their lands. It is can also be explained as the act of keeping a person’s property against his or her will. It occurs when entry onto another person or group’s land has occurred by use of illegitimate means, and with force, and possession is retained by force or threats of violence against the will and free consent of the land owner(s). In Uganda, forcible detainer of land is a statutory criminal offence. Section 302 of the Penal Code Act forbids criminal trespass. In Rodrigues v Ufton (1894) – it was held that the owner of real estate can only bring an action to restrain trespass to his property where the owner has rights to minerals on or under the surface. Section 335 of the Penal Code forbids malicious damage to property. Section 2 54 of the Penal Code Act forbids theft of others’ property, Section 81 of the Penal Code Act created the criminal offence of threatening violence, especially by useof words, Section 236 of the Penal Code Act prohibits physical assault occasioning actual bodily harm.Without a doubt both the Constitution and the Laws of Uganda guarantee the of security of tenure under Article 237(3) of the Constitution, for private land owners, as well as lawful and bona fide occupants or tenants ( bibanja holders). Those public officials in Uganda,who are busy obstructing, individuals land owners from freely disposing of their land (natural wealth and resources) for its fair value on the world market, and preventing local land owners from entering lease agreements with foreign or local investors of their choice, may be committing a serious criminal offence carrying a five year jail sentence on conviction.. In Uganda, Section 392(c) of Penal Code Act created a statutory crime and says: “any person who conspires with another to prevent or obstruct the free and lawful disposition of any property by its owner for its fair value commits a misdemeanour and is liable to imprisonment for five years.” The government of Uganda is a signatory to Article 1(2) of International Covenant on Economic, Social and Cultural Rights (“ICESC”)says: “all peoples may, for their own ends, freely dispose of their natural wealth and resources without prejudice to any obligations arising out of international economic co-operation, based upon the principle of mutual benefit, and international law. In no case may a people be deprived of its own means of subsistence.” The complaints of falsification of record sat the land registry and the reported fraudulent issuance of false certificates of land titles on others’ privately owned lands without their consent can also be dealt with under both national and international laws. In Uganda Section 359 of the Penal Code Act created the criminal offence of falsification of register including land registry. Section 89 of the Penal Code Act created the crime of issuing or making false certificatesof title. Section 342 of the Penal Code Act forbids forgery or the making of a false document with intent to defraud or todeceive. Section309 of the Penal Code Act forbids conspiracy to defraud. Section 278 of the Penal Code Act created the offence of deliberate concealment of landtitle deeds. Section 268 ofPenal Code Act forbids embezzlement. Article17 of UNCA requires to establish as a criminal offence, when committedinternationally, the embezzlement,misappropriation and diversion by a public official for his or her benefit orfor the benefit of another person or entity, of any property, public or privatefunds or securities or any other thing of value entrusted to the publicofficial by virtue of his or her position. In Lewis v. Adams [1998] the courts established a legal principle: “acontract for the transfer of an interest in an oil and gas lease is treated asa real property interest and, therefore, is subject to anti-fraud statutes.” References: Books • Stermole F., Stermole J. AndTilton J. [2007]. “Mining Royalties: A global study of their impact on investors, government and civil society” – The International Bank for Reconstruction and Development /The Word Bank • Epstein, Richard A. (1985) “Takings:Private Property and the Power of Eminent Domain.” Cambridge, MA: HarvardUniversity Press, 1985. • Siegan, Bernard H. Property andFreedom: The Constitution, the Courts, and Land-Use Regulation. New Brunswick,NJ: Transaction Press, 1997 • Gentry, D.W and O’Neil, T.J(1984). “Mine Investment Analysis.” New York: Society of Mining Engineers. • Satoshi Murao, Victor Maglambayan, Edmund Bugnosen [2003] “Risk Communication between Mineral Property Developers and Local Communities.” London: Mining Communications Ltd • Ddumba-Sentamu, J. (2004) “BasicEconomics for East Africa.” 1st Edition. Kampala: Fountain Publishers. • Griffiths, A., & Wall, S.(1999). “ Applies Economics.” London: Longman • Mankiw, N.G (2003).“Macroeconomics.” 5th Edition. NY: New York Worth Publishers. • Tayebwa, M.B (2007) “Basic Economics.” 4th Edition. Kampala: Genuine Researchers and Publishers. • Todaro, M. (1994) “EconomicsDevelopment” 5th Edition. London: Longman • Livingstone, H (1980) “Economics for Eastern African.” London: Heinemann • Maurice C. Fuerstenau &Kenneth N. Han [2003]. “Principles of Mineral Processing.” Colorado: SME Further sources and reading: • Uranium discovered in parts of Buganda, Toro, Ankole and Bunyoro URL: allafrica/stories/200607040060.html • Philip Burget “US Bill Calls for Uranium Mining Royalties, ” Resource Investor,11 April 2011 URL: resourceinvestor/2011/04/11/us-bill-calls-for-uranium-mining-royalties • Isaac Imaka “Bunyoro wants 12.5% of oil funds” The Monitor, 01 June 12012 URL: monitor.co.ug/News/National/Bunyoro+wants+12+5++of+oil+funds/-/688334/1417970/-/kyo21k/-/index.html • IBI Corporation announced it acquired four new exploration licenses in the Mubende, Ssingo County, Buganda URL: infomine/index/properties/MUBENDE_URANIUM.html • Ibrahim Kasita “Uganda looks to nuclear energy” The New vision, 15 March 2009 URL: newvision.co.ug/D/8/220/674696 • ISN Zurich “Africa and the Global Market in Natural Uranium.” 28 February 2014 URL: isn.ethz.ch/Digital-Library/Articles/Detail/?lng=en&id=176997 • The Observer “Canada firm working on Uganda nuclear strategy” 26 March 2009 URL: observer.ug/index.php?option=com_content&view=article&id=2690:canada-firm-working-on-uganda-nuclear-strategy- • Chris Dickerson “Gas companies agree topay $380M to settle Roane royalty case” West Virginias Legal Journal, 24 October 2008 URL: https://wvrecord/news/215521-gas-companies-agree-to-pay-380m-to-settle-roane-royalty-case • Abraham Lustgarten “Unfair Share: How Oiland Gas Drillers Avoid Paying Royalties” ProPublica, 15 October 2013 URL: motherjones/environment/2013/10/oil-drilling-avoids-royalties • Frederic Musisi “Oil activities sparkrights abuse in Albertine” 20 March 2014, the Daily Monitor URL: monitor.co.ug/News/National/Oil-activities-spark-rights-abuse-in-Albertine---report/-/688334/2252274/-/uwm3yt/-/index.html • Christopher Helman “Screwing RoyaltyOwners Means Chesapeake Is Stealing Cash” Forbes, 17 March 2014 URL: forbes/sites/christopherhelman/2014/03/17/screwing-royalty-owners-means-chesapeake-is-stealing-case • John K. Abimanyi “Cultural leaders let the cat outof the bag” the monitor, May 29 2012 URL: monitor.co.ug/artsculture/Reviews/Cultural+leaders+let+the+cat+out+of+the+bag/-/691232/1415156/-/14kv0gf/-/index.html • “RPT-ChesapeakeEnergy, NiSource lose gas royalty verdict” URL: reuters/article/2007/01/29/chesapeakeenergy-court-idUSN2845015820070129 • Pennsylvania legislation guarantees minimum royalty rights of 12.5% URL: farmanddairy/news/pennsylvania-legislation-guarantees-minimum-royalty-rights-amid-controversy/154096.html
Posted on: Wed, 26 Mar 2014 19:29:27 +0000
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