Siva Parameswaran, World News Editor
In a huge setback to the Rwandan President Paul Kagame, the East African Court of Justice (EACJ) has declared the Kigali government’s decision to confiscate a huge commercial property designating it as an abandoned property as illegal.
The court ruled the Rwandan government was wrong and acted in an illegal manner in taking over the asset and selling it off without compensating the owners.
This judgment is likely to have serious repercussions in Rwanda as similar cases are likely to arise.
Delivering the 58-page judgment the three judges unanimously ruled the seizure of the Union Trade Centre (UTC)-a huge commercial mall in Kigali by the Rwandan Government was illegal and ordered a compensation of $ 500,000.
Earlier the Kagame government through its official arm the Rwanda Revenue Authority (RRA) took over its management citing the founder and principal shareholder-Tribert Rujugiro Ayabatwa-was not residing in the country. Subsequently, it ordered all the tenants in the mall to pay their rent to a designated bank account.
Ironically it was President Paul Kagame who was the chief guest when Tribert launched the UTC shopping mall at an investment of twenty million American dollars in 2006.
But seven years later in 2013, the Rwanda government took over the mall- what the investors called ‘an illegal act’- claiming it to be abandoned property.
The Abandoned Property Law
Critics of the government argue that ‘The Abandoned Property Law’ itself is fundamentally flawed and is aimed at targeting individuals who are alleged to be perpetrators of the genocide in 1994 and fled from Rwanda.
The law says “any immovable or movable property unrightfully possessed by others due to the fact that the rightful owners either died without a legally recognized heir or do not reside in Rwanda for various reasons without having left behind a person legally authorized to manage their property”.
This law also applies to movable or immovable property neglected by owners for reasons referred to above.
Subsequently, the RRA served notice in 2015, two years after taking over the UTC mall claiming unpaid taxes. While the matter was being heard in the EACJ the Rwandan government pronounced the UTC as a tax defaulter of nearly $ 1.5 million, not withstanding the fact that the mall was taken over by the government two years earlier.
Then in 2017, the government seized the building for non-payment of taxes.
Lawyers both in Rwanda and the EACJ point out ‘The Kagame government is breaking the Abandoned Property law-which was illegal to apply to the UTC in the first place’.
As per the said law, the government is responsible for safekeeping abandoned properties until they revert to the owners or their heirs.
Tax due argument busted
It was argued in the EACJ in Tanzania that from the time the state assumed the management of the said mall the rental proceeds from the UTC mall amounted to $ 120,000 per month and would have fetched 5,760,000 (five million seven hundred and sixty thousand) which would have been sufficient to pay the alleged tax dues of nearly one million one hundred thousand dollars.
But the government argued it has neither taken over UTC nor the UTC mall but simply assumed control and management of the Applicant’s share. The judges noted that the Applicant referred to Mr.Rujugiro.
The court rejected the state’s contention that the applicant does not have a ‘locus standi’.
On the crucial issue of ‘Whether the respondent’s actions of taking over the Applicant’s mall and subsequently auctioning it are inconsistent’-the judges answered in affirmative.
The three judges in conclusion ruled “A declaration is hereby issued that the Respondent’s action of taking over of the UTC mall and subsequently selling it off are illegal”.
Apart from ordering $ 500,000 in general damages along with 6% p.a simple interest the judges also directed the Rwandan government to furnish the Applicant (UTC) with accountability for the rental and sales proceeds realized from the UTC mall between 1/10/2013 to 27/09/2017.
Amidst allegations that the Rwandan government is on a ‘confiscation spree’ of ‘abandoned properties,’ this judgment is considered for a shot in the arm of those who plan to sue the government in this regard.