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Freight Forwarding agent ordered to pay sh102m for breach of contract
The court further ordered Gemcolink Logistics to pay interest at the rate of 20% per annum on the principal sum from January 2021 until payment in full, as well as the costs of the suit.
Freight Forwarding agent ordered to pay sh102m for breach of contract
By: Edward Anyoli, Journalist @New Vision
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The Commercial Division of the High Court has ordered Gemcolink Logistics Limited, a customs clearing and freight forwarding agent, to pay a principal sum of sh102m to CIC General Insurance Uganda Limited over breach of contract.
Justice Stephen Mubiru ordered Gemcolink Logistics Limited and its two directors to jointly and severally pay CIC General Insurance Company sh102.2m, being the amount paid by the plaintiff (insurance firm) to Uganda Revenue Authority (URA) on behalf of Gemcolink Logistics.
In his judgment, Mubiru ordered the defendants to reimburse the sh102.2m that the insurance company paid to URA under a customs bond on January 24, 2021.
“The judgment is entered for the plaintiff (CIC General Insurance Company) against the defendants jointly and severally for sh102,258,778 as the principal sum, being the amount paid by the plaintiff to URA under the customs bond on January 24, 2021,” Mubiru said.
The court further ordered Gemcolink Logistics to pay interest at the rate of 20% per annum on the principal sum from January 2021 until payment in full, as well as the costs of the suit.
How dispute arose
The insurance company sued the customs clearing and freight forwarding agent and two of its directors to recover sh102.2m it paid to URA after a fuel consignment destined for the Democratic Republic of Congo (DRC) failed to reach its destination.
The insurer had issued a sh2b customs bond to cover the agent’s operations between January 1 and December 31, 2018. The Logistics firm signed a corporate counter-guarantee, while its two directors provided personal guarantees undertaking to indemnify the insurer against any liabilities arising from the bond.
The court further ordered Gemcolink Logistics to pay interest at the rate of 20% per annum on the principal sum from January 2021 until payment in full, as well as the costs of the suit.
How dispute arose
The insurance company sued the customs clearing and freight forwarding agent and two of its directors to recover sh102.2m it paid to URA after a fuel consignment destined for the Democratic Republic of Congo (DRC) failed to reach its destination.
The insurer had issued a sh2b customs bond to cover the agent’s operations between January 1 and December 31, 2018. The Logistics firm signed a corporate counter-guarantee, while its two directors provided personal guarantees undertaking to indemnify the insurer against any liabilities arising from the bond.
The dispute arose after customs taxes totaling sh102.2m was assessed on two declarations relating to a fuel consignment destined for Bunia in the DRC.
According to the insurer, the fuel never reached its declared destination. Records in URA’s Asycuda customs system instead showed that the consignment had been imported into Uganda on April 1, 2019, making it liable for taxes.
After the Logistics company failed to pay the assessed taxes, URA called on the customs bond on September 16, 2020. The insurer subsequently paid URA sh102.2m on January 24, 2021, after advising Gemcolink Logistics to provide proof that the fuel had been exported or challenge the tax demand in court.
The insurer then sued Gemcolink Logistics and its two directors, seeking to recover the money, interest and legal costs under the indemnity agreements.
However, the defendants denied liability, arguing that they were transporters of Mogas fuel in transit rather than importers of the consignment.
According to the insurer, the fuel never reached its declared destination. Records in URA’s Asycuda customs system instead showed that the consignment had been imported into Uganda on April 1, 2019, making it liable for taxes.
After the Logistics company failed to pay the assessed taxes, URA called on the customs bond on September 16, 2020. The insurer subsequently paid URA sh102.2m on January 24, 2021, after advising Gemcolink Logistics to provide proof that the fuel had been exported or challenge the tax demand in court.
The insurer then sued Gemcolink Logistics and its two directors, seeking to recover the money, interest and legal costs under the indemnity agreements.
However, the defendants denied liability, arguing that they were transporters of Mogas fuel in transit rather than importers of the consignment.