The High Court has declined to issue conservatory orders suspending the implementation of a directive to charge $350 (Sh44,878.51 at current exchange rates) per container of all goods destined for South Sudan.
A conservatory order upholds the status quo for the preservation of a subject matter until the motion of the suit is heard.
Clearing agents in Kenya are challenging the $350 levy and sought the orders pending the hearing and determination of their petition.
Justice Olga Sewe ruled that the clearing agents under the umbrella of Kenya International Freight and Warehousing Association (Kifwa) had not made out a prima facie case, and granted the doctrine of sovereign immunity.
The clearing agents sued Mombasa Monitoring Station-National Revenue Authority of South Sudan.
“Until it is proved otherwise, there would be no basis for restraining the respondent from implementing the directive,” ruled Justice Sewe while dismissing the application by Kifwa.
The judge also ruled that it was manifest that that directive was made by or on behalf of the government of South Sudan in respect to exports and imports from the country (South Sudan).
“The respondent has explained that USD 350 is payable only by its nationals thus it has the right to determine the modalities of payment,” ruled Justice Sewe.
Mombasa Monitoring Station-National Revenue Authority of South Sudan had told the court that the money is payable, not by clearing agents, but by the consignees who are citizens of South Sudan.
It said the decision by South Sudan to impose charges on its citizens can only be challenged in that country, and there was nothing ultra vires (beyond legal powers) in the directive.
“The payment of this service is at all times to be paid by the importer or exporter of cargo into and out of South Sudan respectively,” part of the response by Mombasa Monitoring Station-National Revenue Authority of South Sudan filed in court states.
Kifwa claims that the Mombasa Monitoring Station-National Revenue Authority of South Sudan issued a directive that they should pay the money to a private company in Uganda, Invesco Uganda Limited, for a tracking system christened mandatory Electronic Cargo Tracking Note (ECTN).
However, Mombasa Monitoring Station-National Revenue Authority of South Sudan says that the ECTN certificate is a mandatory document to be obtained by importers/consignees and exporters of cargo into and from South Sudan.
In its petition, Kifwa says they are licensed by the Commissioner of Customs Kenya to undertake cargo clearance and collection of taxes and levies due to the government.
“As clearing agents, we operate under Kenyan laws and the East Africa Community Customs Management Act and the regulations made thereunder,” part of the petition states.
Kifwa wants a declaration that the levy per unit to all imports headed to South Sudan is unconstitutional.
It also seeks an order issued to quash the directive and prohibit the Mombasa Monitoring Station-National Revenue Authority of South Sudan from enforcing the directive.
According to Kifwa, there exists a cargo monitoring tracking system monitored by the customs department in Kenya-Regional Electronic Cargo Tracking System-which is efficient, mandatory, and free within East Africa.
They argue that the South Sudan ECTN is inconsequential in terms of cargo tracking except for collecting the money and directing the funds to a private account in Uganda.
“The directive to collect the revenue through ECTN is being implemented in the country at the port, inland container depots, Container Freight Stations (CFS), Malaba and Busia border points,” the petition states in part.
Kifwa says that Kenyan clearing agents are being forced to implement and collect the pre-requisite ECTN service charge.
It argues that using Kenyan agents to process and collect ECTN service charges or any other taxes within Kenyan customs is going against the law and not within their mandate.
Kifwa says that the directive has highly compromised clearing agents’ fundamental rights to earn a living, is prejudicial, and contravenes the constitution on economic empowerment of truck owners.
“The levy being imposed by the respondent is ultra vires to the law since it has no constitutional basis and has no approval of parliament as required by law,” Kifwa argues in its petition.
It says that under the directive no trucks are leaving the port, ICD, CFS, and border posts since Mombasa Monitoring Station-National Revenue Authority of South Sudan is not releasing any trucks headed to South Sudan before payment of the levy.
The petitioner further says that cargo destined for South Sudan is cleared under Kenya Revenue Authority customs systems under transit entry covered by the regional customs transit guarantee security bond.
Kifwa is also seeking a declaration that the directive issued by the respondent is unconstitutional and contravenes the petitioner’s right to fair administrative justice as enshrined in the constitution.
It also wants a declaration that the directive by the respondent is unconstitutional as it contravenes the petitioner’s right to economic empowerment as enshrined in the constitution.
