The High Court found the 2017 regulations amending the schedule of the trade licensing legislation to conflict with specific laws regulating the legal profession and the pharmaceutical and clearing and forwarding businesses. The Court held it essential to consider relevant existing laws in making of subsidiary legislation or else regulations may be found ultra vires the said existing laws. The Court also regarded specific laws as taking precedence over general laws in the regulation and licensing of the professions and businesses.
On May 8, 2020, the High Court of Uganda (Civil Division) delivered three profound rulings of judicial review applications in Uganda Law Society v Kampala Capital City Authority & Another, Miscellaneous Cause No.243/2017, Uganda Clearing Industry & Forwarding Association v Kampala Capital City Authority & Another, Miscellaneous Cause No.439/2017 and Pharmaceutical Society of Uganda v Attorney General, Miscellaneous Cause No. 260/2019.
The three applications filed in court by the Uganda Law Society (ULS), the Uganda Clearing Industry &Forwarding Association (the Clearing & Forwarding Association), and the Pharmaceutical Society of Uganda (the Pharmaceutical Society) challenged the legality of the Trade (Licensing) (Amendment of Schedule) Instrument,S.I. No. 2/2017 (the Amendment of Schedule Instrument).
The Amendment of Schedule Instrument sought to impose an additional licence requirement, in addition to the respective specific licences of entities and businesses of the applicants’ members.The Instrument results for the Minister of Trade, Industry and Cooperatives in January 2017 amending the Schedule to the Trade (Licensing) Act, Cap 101(as amended). The Amendment of Schedule Instrument provided for the list of businesses and entities required to acquire trading licenses before trading and include-
(a) Law firms
Item 17 (in Part A) and item 25 (in Part C) of the Amendment of Schedule Instrument respectively required law firms operating within towns (urban areas) and city councils (Kampala Capital City Authority) to obtain trading licenses from town clerks. Law firms are regulated by the Law Council under the Advocates Act, Cap 267, and specifically licenced under the Advocates (Inspection and Approval of Chambers) Regulations, S.I. No. 65/2005. The ULS challenged the double regulation and licensing created by the Amendment of Schedule Instrument.
(b) Clearing and forwarding firms
Item 14 (in Part C) of the Amendment of Schedule Instrument required clearing and forwarding firms, who are already licenced annually under the East African Customs Management Act, 2004 (the EACCMA), to further seek a licence from the town clerk of a municipal council. The Clearing & Forwarding Association challenged the double licensing created by the Amendment of Schedule Instrument.
(c) Pharmacies and drug shops
Items 30 and 35 (in Part A) of the Amendment of Schedule Instrument required pharmacies and drug stores, which are already licenced under the National Drug Policy and Authority Act, Cap 206 (the NDPA Act) and applicable regulations, to further obtain a trading licence under the Instrument, so as to lawfully carry on their businesses. The Pharmaceutical Society challenged the parallel regulation and licensing created by the Amendment of Schedule Instrument.
This Alert discusses the significance of the three High Court judicial review decisions on the double and parallel licensing of specially regulated professions and businesses through general trade licensing subsidiary legislation, in light of specific laws regulating the legal profession, clearing and forwarding firms, and pharmacy and drug shop businesses.
JUDICIAL REVIEW OF the Trade(Licensing) (Amendment of Schedule) Instrument, S.I. No. 2/2017
Judicial review is a remedy sought by a party where a public body, or person exercising powers or functions falling under public law, commits acts that are illegal (outside the law or ultra vires), irrational or unreasonable, or procedurally improper.
Judicial review invokes the discretionary powers of court to quash (by order of certiorari) or prohibit an illegal, irrational or procedurally improper act.The court may also order an act required by law to be done by the public body through an order of mandamus.
In the three applications respectively filed by the ULS, the Clearing & Forwarding Association, and the Pharmaceutical Society, the parties largely sought court to quash (declare null and void) the respective items of the Amendment of Schedule Instrument,and to prohibit the implementation of the said items requiring the affected persons or businesses to acquire trading licences, in addition to their respective specific regulatory compliances.
The applications variously faulted the process of making and passing of the Amendment of Schedule Instrument to have been ultra vires other existing laws, which specifically and respectively regulate the licensing of the legal profession, clearing and forwarding firms, and pharmaceutical businesses.
In the ULS and the Pharmaceutical Society applications, the applicants majored and persuaded the court on the special legal regulatory and licensing framework for law firms and advocates,and pharmacies and drug shops respectively, and the illegality and irrationality of the double licensing requirement.
The ULS, among others, advanced the arguments for special regulation by the Law Council under the Advocates Act,Cap 267, and specifically licenced under the Advocates (Inspection and Approval of Chambers) Regulations, S.I. No. 65/2005. The Pharmaceutical Society heavily argued for the sufficiency of the regulation and licensing under the National Drug Policy and Authority Act, Cap 206 and regulations under the Act.
On their part, the Clearing and Forwarding Association persuaded the court that the decision of the Minister in the Amendment of Schedule Instrument was contrary to and ultra vires the applicable licensing legal regime under the EACCMA. The court thus held that: “the applicant has proved to this court that the said decision by the minister was tainted by illegality against the existing laws governing the profession of Clearing and forwarding that were passed by Parliament under the East African Customs Management Act, 2004”.
In all three applications, the Court quashed the respective items of the Amendment of Schedule Instrument complained of by the applicants. Further, the court issued prohibition orders restraining the implementation of the respective quashed items of the Amendment of Schedule Instrument from being implemented against the members of the applicants.
The court found the general law on trade licensing, under the Amendment of Schedule Instrument, to be in conflict with the specific laws that respectively govern and regulate the licensing of the legal profession, clearing and forwarding firms, and pharmaceutical businesses.
The court profoundly held in all three applications that an authority making subsidiary legislation cannot have a blank cheque from the parent or enabling law or Act to make regulations in conflict with other existing laws. The court noted that proper consideration and application of other relevant existing laws is essential. It held that the failure to consider other existing laws in making subsidiary legislation can render the legislation illegal for being ultra vires the said existing laws.
The court’s decisions in the three applications are further founded in the application of specific laws vis-à-vis general laws. The court rightly held specific laws to take precedence over general laws in the regulation and licensing of the applicants’ members’ trade and businesses.
OBJECTIVES—REGULATION VERSUS LICENSING
It is worth noting that the objective of regulation extends further than licensing and raising Government revenue. Whereas the Government raises revenue through licence fees levied as non-tax revenue, the purpose of specifically regulating certain professions,enterprises and businesses goes beyond having means to raise revenue or widening sources of non-tax revenue.
(a) Legal profession
The licensing of law firms and advocates is a preserve of the Law Council and the Chief Registrar of Courts of Judicature. The Law Council annually issues certificates of approval of chambers to law firms. This approval is only issued to a law firm upon complying with the requirements under the law for approval of chambers, including the payment of prescribed annual fees to the Government.
Individual practicing advocates are required to apply for annual practicing certificates. The advocate is required to comply with a number of requirements before being issued with or renewing their annual practising certificate. The advocate is also required to pay annual practicing licence fees to Government as well as subscription for membership to the Uganda Law Society, as prerequisites for issuance of the annual practicing certificate.
In addition, advocates are annually required to obtain at least twenty (20) hours of Continuing Legal Education (CLE) as a requirement for renewing their practicing certificates in a subsequent year. An advocate who obtains the required CLE hours is issued with a Notice of Compliance by the Law Council. Whereas the Uganda Law Society schedules some free CLE events (where advocates are not required to pay to attend the event), advocates have to pay for all other CLE events to attend and obtain the required number of hours.
The foregoing licensing compliance requirements for law firms and individual advocates are intended to achieve far bigger objectives that just collection of Government revenue. The double licensing of law firms under the specific (professional regulatory) laws and the general law on trade licensing, does not add any value to the objectives of the laws regulating advocates and law firms in Uganda. The court was justified not to equate the regulation of the practice of law and justice to street vending and trading.Advocates by law are officers of court.
(b) Clearing and forwarding firms
The regulation and licensing of Clearing and forwarding firms under the EACCMA, (an Act passed by the EAC Legislative Assembly in 2004) obligates Uganda to strictly and fully comply with its obligations under EAC Treaty and applicable Protocols. Uganda as a Partner State of the EAC is bound to implement the Community laws made by the EAC Legislative Assembly.
Both the EAC Treaty and the EAC Common Market Protocol oblige Uganda as a Partner State to remove and restrain from legal and administrative measures that restrain trade in the region, both tariff and non-tariff barriers to trade.
Double, multiple or parallel licensing requirements manifest as barriers to trade, restricting the free movement of goods and services. This is contrary to the obligations of the Partner States under the EAC Treaty and Common Market Protocol.
The court was therefore justified in finding the Amendment of Schedule Instrument to be contrary to and ultra vires the EACCMA. The ruling of the court in Uganda Clearing Industry & Forwarding Association v Kampala Capital City Authority & Another is supportive of the EAC regional integration in as far as it implements the Community law as superseding domestic law.
(c) Pharmacies and drug stores
The business of pharmacies and drug stores is highly regulated for the obvious danger to health and life in the event of falling short of approved standards.
The long title of the National Drug Policy and Authority Act, Cap 206 is very instructive on the objective of the intended regulation. The NDPA Act is intended-
“to establish a national drug policy and a national drug authority to ensure availability, at all times, of essential,efficacious and cost-effective drugs, to the entire population of Uganda, as means of providing satisfactory health care and safeguarding the appropriate use of drugs”.
In the same vein, the Pharmacy and Drugs Act, Cap 280 amends and consolidates—
“the law relating to the control of the profession of pharmacy and trade in and use of drugs and poisons, and other purposes connected therewith”.
The National Drug Authority routinely issues licensing guidelines for pharmacies and drug shops. The different licensing guidelines published in the Uganda Gazette as general notices expressly make reference to the NDPA Act and regulations (including the National Drug Policy and Authority (Certificate of Suitability of Premises) Regulations, S.I. No. 36/2014 and the National Drug Policy and Authority (Licensing) Regulations, S.I. No. 35/2014). The guidelines refer to the ‘pharmacy business’ as a regulated professional business under the NDPA Act and Regulations.
The applicable pharmacy and drug shop licensing regulations provide for detailed licensing requirements aimed at ensuring the achieving of the objectives and purpose of the specific legal and policy regulatory framework.
The double licensing created by the Amendment of Schedule Instrument does not contribute to ensuring availability,of essential, efficacious and cost-effective drugs, to the entire population of Uganda, at all times, nor to the providing of satisfactory health care and safeguarding the appropriate use of drugs, as envisaged by the NDPA Act.
The court was therefore justified in finding the Amendment Schedule Instrument to be contrary to and ultra vires the Trade (Licensing) Act,Cap 101 and the NDPA Act Cap 206.
CONCLUSION—WHAT TO NOTE!
The decisions of the High Court are of significant importance in guiding the regulation and licensing of specially regulated professions or businesses.
The rulings delivered on May 8, 2020 carry the following essential aspects:
1. The requirement of specially regulated entities such as law firms, clearing &forwarding firms, and pharmacies and drug shops to acquire trading licenses in addition to the specific licensing compliances (and fees) amounts to double taxation, and is illegal.
2. Subsidiary legislation made under delegated authority ought to fall within the scope of powers delegated and should be in tandem with and reflect the object and spirit of the principal, primary, or parent law.
3. There is no blank cheque to make rules or regulations under delegated powers without consideration of the object, purpose and spirit of the parent or principal law,the history of the parent law, and other applicable existing laws.
The learned Judge emphasised the need for consultations with stakeholders in the law-making process, as this would reduce litigation arising from laws as and take into consideration stakeholder interests.
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No information contained in this alert should be construed as legal advice from ALP East Africa or ALP Advocates or the individual authors, nor is it intended to be a substitute for legal counsel on any subject matter.
For additional information in relation to this alert, please contact the following:
– Lastone Gulume
Head,Dispute Resolution (Litigation)