Category: Uncategorized

The government continues to be the biggest spender in terms of procurement of goods, works, and services. The government also remains the main provider of infrastructure and related services including roads, health facilities, sewerage and sanitation infrastructure and services, sports facilities, and residential and commercial facilities among others. All these are funded from public funds which are mostly revenue generated from taxation and national resources. The general inadequacy of public funds to finance the needed public infrastructure and services through public procurement requires an alternative approach to financing the delivery of public infrastructure and services. Public Private Partnership (PPP) arrangements provide the alternative and offer great business opportunities to private sector businesses.

In light of this, the passage of the Public Private Partnership Act, 2020 (Act 1039) (PPP Act) and providing the legal framework for PPPs must not only be welcomed but also be of great interest to private businesses. The PPP Act replaces the National Policy on Public-Private Partnerships, which was adopted in 2011.

What is PPP?

Public Private Partnership (PPP) refers to the broad range of contractual arrangements by which public sector entities pursue economic or commercial activities by partnering with private sector entities usually over a long term. The PPP Act defines PPP as “a form of contractual arrangement or concession between a contracting authority and a private party for the provision of public infrastructure or public services traditionally provided by the public sector, as a result of which the private party performs part or all of the infrastructure or service delivery functions of Government, and assumes the defined risks over a significant period of time;”

The figure below summarises the features of a PPP.

Figure 1: Features of a PPP

For an arrangement to qualify as a PPP arrangement or a project to qualify as a PPP project, the following elements must be present:

• (a) One of the parties must be a public entity or an entity owned by government.
• (b) The public entity must seek to partner with a private entity under a contract.
• (c) The private entity must be responsible for providing infrastructure and related services which ordinarily are provided by a public entity.
• (d) The private party must bear a substantial part of the risks associated with the project.
• (e) The main obligations including design, financing, construction, operation and maintenance of the project is performed by the private party.
• (f) The contract is generally for a long term.
• (g) The following entities are listed under the PPP Act as public entities for which a contractual arrangement with a private sector party that satisfies the above requirement will qualify as PPP:

• (a) The outsourcing of government services without the transfer of financial and operational risks to a private party;
• (b) The grant of a mineral right under the Minerals and Mining Act, 2006 (Act 703) or any other applicable enactment on mining;
• (c) The grant of any right for exploration, development or production under the Petroleum (Exploration and Production) Act, 2016 (Act 919) and any other relevant enactment;
• (d) The divestment of ownership or equity of a state-owned enterprise;
• (e) The procurement of goods, works, and services primarily with the use of public funds by any contracting authority under the Public Procurement Act, 2003 (Act 663); and
• (f) Non-commercial activities that are the exclusive preserve of the security services.

Implementation Process

The PPP Act provides that unless a PPP Contract was executed before December 29, 2020, all PPP projects, including the process of contracting, must be in accordance with the Act. The PPP Act regulates the PPP process from start to finish that is: from project identification to procurement of private partners by the public entity to contracting to project implementation.

All aspects of PPP Projects are regulated by the PPP Act as shown below:

The Act sets out the requirements (including approval requirements) for each stage of the implementation process as summarised in the figure below:

• Project Preparation Stage: PPP Projects by nature are generally complex, which is typical of large infrastructure projects. A critical stage is therefore the preparatory stage which entails scoping and describing the project and conducting studies to determine the technical, legal, financial, and commercial feasibility of the project. In view of the conflicting interests of the government entity and private party, there must be a proper framework at the preparatory stage to ensure compliance with the legal requirements, optimum risk allocation and value for money. While the government entity seeks to ensure there is value to the public, the private party seeks to maximize profit. These two interests must be properly synchronized at each stage of the process. As such, the PPP Act requires various steps to be taken at each phase of the preparation stage. This must be followed in sequence with approval granted on completion of the phase.

The PPP Act requires that upon completion of the preparatory stage, the Finance Minister must issue a Seal of Quality prior to the government entity proceeding to the next phase which is the procurement stage.

• Procurement Stage: the next stage upon completion of the preparatory stage is the preparation of relevant procurement documents and launching the procurement process to engage the private partner. A two-step procurement process is recommended under the PPP Act – the pre-qualification stage and the actual proposal stage. At the qualification stage, the government institution will publish invitations for applications to prequalify indicating the minimum qualifications required to shortlist private entities to subsequently submit proposals. If the PPP is to be partly funded by the government entity, the government entity must also obtain written confirmation from the Finance Minister of the availability of funds for the implementation of the project. Upon shortlisting qualified entities, a request for proposal is issued to the shortlisted entities who then are to submit a proposal- both technical and financial- for evaluation. On receipt of proposals, an evaluation committee is set up which evaluates the proposal. The report of the evaluation committee must be approved prior to giving notice of intention to award to the winning bidder
• Contracting Stage: upon approval of the evaluation report, a negotiation committee is set up by the governmental entity to negotiate with the selected bidder on the technical and financial terms of the project agreement (that is the PPP Contract). A negotiation report is prepared by the negotiating committee and submitted to the Finance Minister and the oversight Ministry to enter into the PPP arrangement. Upon accepting the terms, the contract must be submitted for approval by the PPP Approval Committee. Where the conditions in the 1992 Constitution are triggered, the contract must be submitted to Cabinet for approval after which it must be laid before Parliament for parliamentary approval.

The government entity can only execute the contract upon obtaining all required approvals.

• Implementation of Contract: this stage comprises all the post-execution activities undertaken by the parties to the PPP contract including:
• (i) achieving financial close,
• (ii) design of the project,
• (iii) undertaking the construction, testing, and completion,
• (iv) operation and maintenance and
• (v) collection of user charges.

These obligations are generally undertaken by the private party. The government contracting entities also perform obligations imposed under the PPP Contract. This may include providing a guarantee to secure funding, acquisition of the required land, grant of permits, or assisting the private party to obtain permits and others. The contracting entity must also monitor the performance of the obligations of the private entity.

The process provided under the PPP Act may be seen as complex and complicated. This may be due to the very complicated and complex nature of major infrastructure projects. This is in addition to the competing public and private interests involved. It is therefore important that both the public and private entities engage advisors to advise on the project structure, undertake the relevant studies, and provide technical, financial, and legal advice on the contractual and procurement arrangements to ensure compliance with multiple laws and international standards. The engagement of a Transaction Advisor is therefore of utmost importance for a successful PPP process.

Business Opportunities

The opportunities offered by a PPP project are numerous. These cover business opportunities to investors, project sponsors, financial institutions, construction companies, consulting companies, suppliers, employment opportunities, and the general rippling economic effects. All these players must therefore be interested in the implementation of the new PPP arrangement.

The government had earmarked a number of projects including projects in the roads, rail, health, social, and ports sectors for implementation as PPP projects.

Conclusion

The global effect of the pandemic has put more constraints on available resources for the provision of infrastructure and related services by governments, particularly in developing countries like Ghana. The infrastructure gaps keep widening and the alternative solution to close the gap may be through the use of PPP arrangements.

Whilst government embraces this arrangement, the private sector, touted as the engine of growth must proactively prepare to take advantage of the opportunities offered by PPP arrangements.

There have been recent discussions or criticism of public entities in respect of award of contracts through sole source procurement. The loudest voice seem to suggest that the use of “sole” source procurement is “unethical”, “illegal” or at the least geared towards manipulation of the process in favour of a particular contractor, supplier or consultant. It was argued by a panelist on a radio discussion that a major reason for the spate and extent of judgment debts awarded against the state is due to the fact that such contracts are awarded through sole source procurement. In another discussion, a panelist suggested that a clear evidence of corruption in public entities is that about 80% of contracts awarded by public entities are done through sole source procurement.  It must be pointed out that no evidence or basis for these assertions was provided for one to verify.

This article is intended to clear misconceptions created by these discussions on the use of sole source procurement. The article discusses:

1. what is “sole” source procurement
2. justification for sole source procurement
3. procedure for sole source procurement
4. approval required for sole source procurement
5. the role of the procurement entity and the contractors, suppliers or consultant  

It is important to emphasize at this stage that this article relates only to procurement under the scope of the Public Procurement Act, 2003 (Act 663) (the “Act”). Further, it should be clarified that even though the term “sole” source is commonly used, the terminology used under the Act is “single” source procurement. However, the article adopts the common term “sole source”.

What is Sole Source Procurement

The Public Procurement Act prescribes for a number of procurement methods for the procurement of goods, works and services. The Act makes competitive tendering the default procurement method for procurement by entities. Therefore, the use of any procurement method other than competitive tendering is subject to justification and approval. Competitive tendering may either be international or national competitive tendering.

The other methods of procurement that may be adopted subject to justification and approval are:

1. Two-stage tendering
2. Restricted tendering
3. Single–source procurement
4. Request for quotation.

Sole source procurement is, therefore, one of the methods of procurement provided for under the Act for the procurement of goods, works, and services. It is a method of procurement where goods, works or services are procured from a single source (without a competitive process).

The Act permits and provides for the use of sole source procurement subject to conditions or circumstances prescribed under the Act. The use of sole source procurement per se is, therefore, not illegal, and does not necessarily imply any unethical or corrupt activity on the part of the entity employing such method.

However, it is admitted that sole source procurement is more likely to be abused (in comparison to competitive procurement methods) because of the absence of competition. There are, however, measures provided under the Act to minimize the occurrence of such abuse. These safeguards are the prescription of:

1. clear circumstances or criteria where the use of sole source is permitted.
2. procedures to follow
3. approval required for the use of sole source.

Criteria For The Use Of Sole Source Procurement

The Act prescribes seven (7) circumstances where an entity may employ the sole source procurement method. These are:

• Availability of goods, works or services from one source – an entity is permitted to engage in sole source procurement under this circumstance if two conditions are satisfied:
• The goods, works or services are available from only one particular supplier or contractor, or only one particular supplier or contractor has exclusive rights over the goods, works or services; and
• (There are no reasonable alternatives or substitutes available.

If these two conditions are satisfied, the entity is permitted under the Act to employ the sole source procurement method to procure the goods, works or services. Illustration: a public entity seeks to purchase decoders that broadcasts cartoon network for all nursery schools in Ghana. If the decoder is available from only one entity or only one entity has the exclusive right over the decoder with a cartoon network channel, then the first condition is satisfied. The second condition that must be satisfied is whether there are reasonable alternatives or substitutes to a decoder with cartoon network channel. In this case, if there is another supplier of decoders with channels that broadcast animated videos, (example; boomerang, cartoonito) then the question of the second condition must be considered. In that case what is reasonable alternative or substitute is a question of fact (not law) depending on each particular circumstance.

(2) Urgent Need of Goods, works or services – under this circumstance, three conditions must be satisfied:

• There must be a pressing need for the goods, works or services;
• The urgency must not be as a result of acts/omissions on the part of the entity; and
• The use of any other tendering process is not practicable due to unforeseen circumstances giving rise to the urgent need.

Illustration: where the Republic is sued in Court, and the Attorney-General’s Department has no capacity and intends to engage a private law firm to defend the country, that may qualify as urgent need for the services under this criterion.

(3) Urgent Need Due to Catastrophic Event – this circumstance is closely related to (2) above. However, under this circumstance, the following conditions must exist:

• There must be a catastrophic event;
• Due to that event, the goods, works or services are urgently needed;
• No other method of procurement can be employed due to the time involved in using those other methods.

The main difference between (2) and (3) above is that the circumstance under (3) is restricted to catastrophic events and there is no requirement as to whether the act/omission of the entity contributed to the urgency. This situation permits the procurement of goods, services, or works in the event of a disaster. Illustration: where there is a devastating flood that requires an urgent supply of necessaries to a community, that may be done under sole source procurement under this criterion.

• where the entity determines that additional supplies need to be procured from that supplier or contractor because of standardization;
• where the entity determines that there is a need for compatibility with existing goods, equipment, technology or services, taking into account the effectiveness of the original procurement in meeting the needs of the entity;
• where the entity determines that the limited size of the proposed procurement in comparison with the original procurement justifies.

• Balance of payments position and foreign exchange reserves.
• Countertrade arrangements offered by suppliers or contractors.
• Local content
• Economic – development potential
• Encouragement of employment and reservation of certain production for domestic suppliers
• Transfer of technology
• Development of managerial, scientific and operational skills

Where sole source procurement is adopted to promote any of the above policies, the Act requires that there should be a public notice and time for comment prior to the entity procuring goods, works or services using sole source procurement.

The above circumstances are the instances where the Act permits the use of sole source procurement. The use of sole source procurement is, therefore, only permitted if one of the above circumstances exists. For that reason, it is advised, that a private entity seeking to secure a contract under a sole source procurement method satisfies itself of the existence of any of the above circumstances. Even though it is the responsibility of the procurement entity to ensure that one of the above circumstances exists, the private entity entering into such a contract must also ensure the Act is complied with. This is because of the general principle under Ghanaian law that a contract tainted by illegality may be set aside by the court or declared void.

Procedure For Sole Source Procurement

The Act provides that to use sole source procurement method, the entity must:

1. Invite proposal from the service provider; or
2. Request for quotation from the single contractor or supplier.

This implies that the entity must be satisfied with the proposal or quotation provided by the single service provider, or contractor or supplier respectively. This further implies that the proposal must be evaluated, and if required, there must be a negotiation with the supplier or contractor prior to execution of contract. In order to ensure these are done, the Public Procurement Authority (PPA) requires the entity to undertake a value for money assessment and ensure that the entity will get value for the money to be expended on the procurement of the goods, works or services.

The Guidelines issued by the Ministry of Finance and Economic Planning to guide the use of sole source procurement to procure goods, works or services requires institutions to provide information that satisfy the following:

1. Capability and qualification of the proposed firm; and
2. Conditions of contract and financial proposal.

On the capability and qualification of the proposed firm, the institution must provide detailed information and demonstrate that the proposed supplier, consultant or contractor possesses the required experience and capability to carry out the work. The information should include the following:

1. Name of the proposed firm
2. Professional and technical qualifications and competence
3. Financial resources
4. Equipment and other physical facilities
5. Managerial capability, reliability, experience in the procurement object, and reputation
6. The personnel to perform the procurement contract
7. Evidence that the firm has the capacity to enter into the contract
8. Evidence that the firm/entity is solvent, not in receivership, bankrupt or in the process of being wound up, does not have its business activities suspended or is not a subject of legal proceedings that would materially affect its capacity to enter into a contract.
9. Evidence that the firm/entity has fulfilled its obligations to pay tax and social security contributions and paid compensation due for damage caused to property by pollution.
10. The corporate entity has no director or officer who has in any country been;

• Convicted of any criminal offence relating to their professional conduct or making false statements or misrepresentations as to their qualifications to enter into a procurement contract within the last ten years; or
• Disqualified pursuant to administrative suspension or disbarment proceedings.

Even though the Guidelines require the evidence to be provided by the procurement entity to the PPA, it is for the entity, based on information made available by the supplier, contractor or consultant, to satisfy itself of the capability and qualification of the firm prior to submission of such evidence to the PPA for approval.

The submission of conditions of contract and financial proposal is to ensure cost effectiveness, and favorable contractual terms and conditions under the procurement contract. This requires that information is provided on:

1. Detailed cost of the proposed procurement
2. Demonstration that the proposed cost represents value for money. The Guidelines providethat this can be done by comparing the proposed cost with recent similar projects carried out through competition, or by comparing the proposed cost with available national and international standards.

Proposed draft terms and conditions of contract, which as much as possible must be consistent with agreed international terms.

The entity procuring under the sole source procurement method must therefore request for, obtain and evaluate the financial proposal of the supplier, contractor or consultant. The parties (procurement entity and supplier, contractor or consultant) must agree on the terms and conditions of contract which must be consistent with terms generally included in contracts of that nature. Above all, in the evaluation of the proposed cost, the procurement entity must undertake value for money assessment. A proper value for money assessment will ensure that the entity obtains the maximum value or benefit from the procured goods, works or services in comparison to the resources to be expended.

The essence of this procedure is to ensure that:

1. The firm is qualified to perform the contract
2. The firm has the capacity to enter and perform the contract
3. The firm has the resources required to perform the contract
4. The firm is in compliance with relevant laws
5. The terms and conditions of the contract are favorable to the procurement entity.
6. There is cost effectiveness and the use of sole source procurement does not result in higher cost than would have been incurred under other methods.

Approval

The PPA is established under the Act to ensure compliance with the Act. As part of its function, the PPA is to play the gateway–keeping function to ensure that sole source procurement is used in accordance with the Act. The use of sole source procurement method is therefore subject to the express approval of the PPA. It is in the light of this that the Guidelines issued on sole source procurement require the entity to submit information or evidence to the PPA on the following:

1. Justification under the Act for use of sole source procurement method
2. Capability and qualification of the proposed firm
3. Conditions of contract and financial proposal

The PPA must therefore ensure that one of the circumstances described above exists to warrant the use of sole source procurement method. It must also ensure that the prescribed procedure is followed or has been followed. This involves evaluating the evidence submitted to ensure that the proposed firm is qualified and has the capacity to perform the procurement contract. In addition, the PPA must vet the financial proposal to ensure that it demonstrates value for money.

Conclusion

The use of the sole source procurement method is prescribed under the Act. Its use is subject to justifications prescribed and procedures stated under the Act as well as approval of the PPA. The use of such procurement method, in accordance with the Act, is not illegal or unethical and does not connote corrupt activity on the part of the entity employing the method.

However, like any other procurement method prescribed under the Act, the process may be abused. It is therefore important that all the relevant stakeholders, including the procurement entity, the contractor, supplier or consultant being engaged, the PPA, and the public at large, have an interest in ensuring the circumstances justify the use, the procedures prescribed under the Act are followed, and the relevant approval is obtained.

More importantly, it is for the private entity (contractor, consultant, or supplier) to ensure the use is justified, the procedure followed, and approval obtained since the procurement contract can be set aside for breach of the law. Procurement entities and private parties must therefore ensure the three (3) main criteria are satisfied and if necessary seek legal advice on the satisfaction to avoid abuse of the law.

Further to our earlier legal alert issued on 16th December 2020 on “Understanding Digital Tax and its Implementation in Kenya,” we wish to inform and remind all digital service providers operating in the digital marketplace in Kenya of the mandatory requirement to file DST returns and make payment for the tax due, by 20th February 2021.

This is pursuant to Regulation 10 (2) of the Income Tax (Digital Service Tax) Regulation, 2020 which requires all digital service providers to file their DST returns every 20th day of the following month that the digital service was offered. Non-compliance with the requirement shall attract penalties and sanctions as prescribed under the Tax Procedures Act, 2015.

 

It is with deep sorrow that we announce the passing of Nana Serwah Godson-Amamoo which incident occurred on March 28, 2024.

Nana Serwah was the lead partner in the firm’s Natural Resources and Extractive Industries Practice Group and a key member of the Public Sector Advisory and Government Business Practice Group. She had over nineteen (19) years’ practice experience and represented our clients on many deals and related sectors.

Nana also served on the Technical Advisory Committee of the Nuclear Regulatory Authority and on the board of United Way Ghana.

A book of condolence will be open at the firm’s Accra offices from Wednesday April 3, 2024, between 9:00 am and 4:00 pm each weekday for friends and sympathizers to pay tribute to Nana.

We will communicate the funeral arrangements as soon as the family provides the details. In the meantime, we request that her family is accorded the privacy needed in this time of grief.

AB and David Africa joins the family and sympathizers the world over in mourning her loss. Nana Serwah will always be in our hearts.

The upsurge in the number of strikes called in recent times by various cadres of workers, including teachers, doctors, nurses, and lecturers, has witnessed a common thread – an outcry for the implementation of Collective Bargaining Agreements (CBAs) between the workers and their respective employers. This has caused a natural spike in the Kenyan public’s interest in the concept of a CBA – what it is, what it entails, and what its implementation means for both the workers and the employers.

What is a CBA?

The concept of collective bargaining is entrenched in the Constitution of Kenya under Article 41 which provides for rights relating to labour relations, including the right to fair labour practices, the right to reasonable working conditions, the right to join and participate in the activities of a trade union and the right to go on strike. Article 4(d) specifically provides for collective bargaining on terms that, “every trade union, employers’ organisation, and the employer has the right to engage in collective bargaining.”

Section 2 of the Labour Relations Act, 2007 (the Act) defines a “collective agreement” as a written agreement concerning any terms and conditions of employment made between a trade union and an employer, group of employers, or organisation of employers. On the other hand, a “recognition agreement” is defined as an agreement in writing made between a trade union and an employer, group of employers or employers’ organisation regulating the recognition of the trade union as the representative of the interests of unionisable employees, employed by the employer or by members of an employers’ organisation.

Ordinarily, the employer first enters into a recognition agreement with the trade union to recognise the trade union for purposes of collective bargaining. The recognition agreement has to be in writing, in line with the provisions of section 54(3) of the Act and it sets out the terms upon which the employer recognises a trade union. Thereafter, the employer and the trade union may negotiate and enter into a CBA which sets out the terms and conditions of employment of the workers.

Simply put, the recognition agreement is the initiating document that provides the enabling environment for trade unions and employers to enter into a CBA. A CBA covers a number of issues affecting the employees concerned, including; hours of work, salaries payable percentages of salary increments, promotions of the employees and the process to be followed in case of termination of their services including redundancy.

Legal Effect of a CBA

Section 59(5) of the Act provides that a CBA becomes enforceable and shall be implemented upon registration by the Employment and Labour Relations Court (ELRC) and shall be effective from the date agreed upon by the parties. Registration of a CBA with the ELRC is therefore a mandatory requirement for it to be legally valid and enforceable. This is the main issue that plagued the 2016/2017 doctors’ strike where doctors in the public sector were seeking a three hundred percent (300%) pay increase pursuant to a CBA between the doctors’ union and the Ministry of Health on behalf of the Kenyan Government. The Government’s position was that the CBA had never been registered with the ELRC and was therefore unenforceable.

The Act further provides that once a CBA is signed, it becomes binding on the parties to the agreement, for the period of the agreement, while the terms of the CBA are incorporated into the employment contracts pursuant to the provisions of section 59(3) of the Act.

For example, during the recent doctors’ and nurses’ strikes, issues of promotions and allowances took center stage and the case advanced in support by the unions was that these were matters covered under the respective CBAs and ought therefore to be implemented as part and parcel of the employment contracts.

Applicability and Relevance

Due to changing circumstances in the world of business and financial constraints in the current world economy, many private companies have been re-structuring their businesses and cutting back on the number of employees that they maintain. As a result, there is a marked increase in the number of terminations of employment, on account of redundancy.

The challenge that these companies are facing in carrying out the redundancy processes is that whether out of omission or commission, they often times do not comply with the prescribed procedures set out in the CBA. Matters such as giving the concerned union at least one (1) month’s notice before effecting a redundancy process and the fact that the company usually has to consider compensating the employees for the number of years served for example, are issues that companies do not always take into consideration.

The concerned employees end up suing the company, whether as individuals or through their unions and the ELRC has not hesitated to apply the provisions of the Act, by finding that the terms of the CBA are binding and ought to be implemented.

Court Decisions

There have been several key decisions handed down by the ELRC in connection with CBAs. In the case of Kenya Plantation & Agriculture Workers Union v Coffee Research Foundation (2014) eKLR the Union brought that claim on behalf of ten (10) Claimants who were the Respondent’s security guards. Here, the ten (10) Claimants had worked for the Respondent for periods exceeding five (5) years, during which the Respondent had concluded a CBA with the Union. The CBA contained a thirteen percent (13%) wage increment for each year and benefits including termination benefits under the retrenchment clause, which the Respondent chose to ignore when it terminated the Claimants’ services. The ELRC found that the Respondent had discriminated against the Claimants and ordered the implementation of the CBA with respect to pay in arrears underpayment of wages and pay of redundancy benefits.

In Kenya Union of Commercial Food and Allied Workers v Kenya National Library Service (2016) eKLR, the Respondent had concluded a CBA with the Claimant union but the Respondent had partly implemented the CBA by paying new salaries, allowances, and part of the arrears. The balance that was left unpaid, it was argued by the Respondent, was an amount that had been factored into the Respondent’s 2014/2015 budget submitted to the parent Ministry, but no funds had been availed to enable the Respondent to implement the CBA. It was the Respondent’s defence therefore that they had not refused to fully implement the CBA but that its hands were tied by the unavailability of funds from the National Treasury.

The ELRC was unimpressed and held that once a CBA has been registered, as was the case in the claim before it, section 59(5) of the Act had already taken effect and therefore the CBA was binding and enforceable and failure to implement any part of the CBA gave the wronged party a remedy of specific performance. The ELRC further held the view that since the Respondent was claiming inability to pay due to acts of a third party, nothing prevented it from joining any such party/parties to the case for them to bear responsibility for the owing dues. In the upshot of its decision, the ELRC entered Judgment for the Claimant against the Respondent for specific performance of the terms of the CBA.

Cases such as the above set strong precedents for the notion that there are no shortcuts to implementing a CBA.

Way Forward?

Public bodies and private entities alike ought to appreciate that collective bargaining is a constitutionally guaranteed right, duly entrenched under the Bill of Rights and that there can be no avoiding of CBAs. All parties ought to be keen at the negotiation table of CBAs so that they fully understand what they are binding themselves to. If any terms seem complex or difficult to decipher, it is advisable to consider seeking legal advice on the same so that those provisions are well interpreted and understood by the parties prior to agreeing to the same.

Employers also need to consider the long-term financial effects of CBAs before negotiation and execution, as it is no defense to blame a third party for non-compliance with a CBA. Unions also need to be aware of the necessary steps to be taken to ensure that a CBA is legally valid and enforceable, so as not to become unstuck at the crucial time of agitating for implementation of the CBA.

On 31st December 2020, the Cabinet Secretary for Lands and Physical Planning, Ms. Farida Karoney published Gazette Notice No. 11348 of 2020 (“the Notice”) notifying the general public of the conversion of specific old land registration numbers to new parcel numbers. The Notice outlines the old registration numbers and the new parcel numbers. It also categorises the listed parcels of land under newly established land registration units, bearing various block numbers.

1. LEGALITY OF THE NOTICE

The Notice is premised on the provisions of the Land Registration (Registration Units) Order of 2017 (“the Regulations”) promulgated under Section 6 of the Land Registration Act, 2012 (“the Act”). Section 6 of the Act empowers the Cabinet Secretary to constitute an area as a land registration unit, as well as vary the unit’s limits at any time.

Under Regulation 4 of the Regulations, the office responsible for land survey is mandated to prepare cadastral maps together with a conversion list for existing titles issued under the repealed land Acts. Thereafter, the cadastral maps and conversion list are presented to the Registrar, who forwards them to the Cabinet Secretary for publication in the Kenya Gazette and two (2) national dailies within thirty(30) days of receipt. The Cabinet Secretary is required to specify in the publication, a date not exceeding four (4) months when new land registration units are to take effect.

It is on this basis that the Notice was published and specified 1st April 2021 as the effective date. All subsequent dealings in the listed parcels will be undertaken in the new registers, under the new land registration units, from that date henceforth. Likewise, all existing registers shall be closed to pave the Way for the operationalization of the new registers by that date. Nevertheless, the closed registers and supporting documents will be retained in both physical and electronic formats.

Any aggrieved person having an interest in a property listed in the Notice, may in the meantime lodge a complaint with the Registrar within ninety (90) days of the Notice’s publication. The person may also register a caution pending clarification or resolution of the complaint. There is also a further avenue for appeal of the Registrar’s decision to court.

Lastly, the Registrar will initiate the process of migration of titles for the affected properties. This will be done by advertising in two (2) national dailies and on radio stations of nationwide coverage, a notice calling upon the concerned owners to apply for new titles in the prescribed format. Each application shall be accompanied by the original title and the owners should make a complaint to the Registrar in the prescribed form (Form LRA 96) set out in the regulations regarding the conversion list or the cadastral map: Pending the resolution of any complaint, apply for registration of a caution in the prescribed form (Form LRA 67) set out in the regulations. registration documents, for proof of ownership. Once new titles are issued, the previous ones will be canceled and retained by the Registrar for safekeeping.

2. EFFECT OF THE NOTICE

From the 1st of April 2021, all transactions with the outlined parcels of land shall be carried out under the new registers. As such, the owners of those parcels should acquire new titles to enable future effective dealings in their properties. Any aggrieved person may within ninety (90) days from 31st December 2021:

• Make a complaint to the Registrar in the prescribed form (Form LRA 96) set out in the regulations regarding the conversion list of the cadastral map; or
• Pending the resolution of any complaint, apply for registration of caution in the prescribed form (Form LRA 67) set out in the regulations.

3. REGISTRY INDEX MAPS

Vide Press Statement issued to expound on the Notice, the Cabinet Secretary has indicated that the

conversion would also entail the use of Registry Index Maps(RIMs), as registration instruments to replace deed plans, with the use of RIMs expected to minimize land fraud, given that they capture all land parcels within a designated area, whereas a deed plan only captures data on a specified parcel. This would ostensibly make it easier to detect any changes or alterations.

4. CONCLUSION

It is evident that the conversion exercise is a novel undertaking with far-reaching consequences.  Therefore, the affected proprietors must be vigilant and compliant with all the notices or requirements that the Cabinet Secretary or Registrar may prescribe, to facilitate a smooth transition of their respective properties’ records. In the meantime, they should also where necessary, seek clarification or lodge complaints, to ensure that their concerns are promptly addressed.

On 7th May 2021, the Cabinet Secretary for the Ministry of Lands and Physical Planning (the “Ministry”) issued a notice (the “Notice”) informing the general public of the conversion of long-term leases that do not conform with section 54 (5) of the Land Registration Act, 2012 (the “LRA”) and section 13 of the Sectional Properties Act, 2020 (the “SPA”).

Section 54 (5) of the LRA stipulates that the Registrar shall register long-term leases and issue certificates of lease to confer ownership in apartments, flats, maisonettes, townhouses, or offices (collectively “units”). The registration and issuance of title will only be done where the units comprised are properly geo-referenced and approved by the statutory body responsible for the survey of land.

Section 13 (2) of the SPA stipulates that all long-term sub-leases that were intended to confer ownership of an apartment, flat, maisonette, townhouse, or office and were registered before the commencement of the SPA, shall be reviewed so as to bring them into conformity with section 54 (5) of the LRA highlighted above.

 

In a bid to harmonize the foregoing provisions of the LRA and SPA, the Ministry is set to embark on the conversion of long-term leases previously registered on the basis of architectural drawings, to conform with the current land regime. Further, the Ministry has stipulated that from 10th May 2021, it will no longer register long-term leases supported by architectural drawings intending to confer ownership. We however note that as of the date of this alert, the Lands Office, for the time being, continues to accept long-term leases supported by architectural drawings.

The effect of the Notice is that all sectional units shall now be required to have properly registered sectional plans. All sectional plans submitted for registration should be geo-referenced, indicating the parcel plans, the number identifying the unit, the approximate floor area of each unit, and the user of the units. The sectional plans must also be signed by the proprietor and signed and sealed by the Director of Survey.

For purposes of conversion of already registered long-term sub-leases, the owners of the property will be required to make an application in the prescribed form and attach the following documents to the land’s registry:

• a sectional plan;
• the original title document;
• the long-term lease previously registering the unit; and
• the rent apportionment for the unit.

The Registrar may however dispense with the production of the original title if the developer is not willing or is unavailable to surrender the title, for the purposes of conversion.

Upon submission of the above, the sectional plan will be registered, and the previous register closed. A new register will be opened with respect to each unit in a registered sectional plan and a Certificate of Lease issued. It is indicated that owners will not incur fresh or additional stamp duty charges upon conversion if the requisite stamp duty was paid when registering the long-term lease.

The above developments come in the wake of numerous land-related changes in Kenya, ranging from digitization to conversion of titles issued under old land title regimes to new titles. In spite of the progressive steps taken, there are still some concerns around the conversion process. These include the absence of clearly articulated procedures for conversion; regulatory gaps as the draft Sectional Property Regulations are still at the stakeholder engagement stage; and opacities in relation to ongoing transactions.

We note that the Law Society of Kenya and the Ministry are currently engaged in discussions to resolve some of the issues arising from these legislative gaps. We are, therefore, keenly following these developments and ongoing discussions and shall keep you updated

The Supreme Court of the United States has recently handed down a decision upholding Google’s use of part of the JAVA SE API Code (the SE Code) created by Oracle. Google had, in the course of creating a new Android Platform for smartphone networks, copied approximately 11,500 lines of the SE Code thereby prompting the institution of the suit by Oracle on the grounds of alleged copyright infringement. Google contested this suit, arguing that its use of the SE Code did not amount to copyright infringement as the same fell within the permitted fair use exception under copyright law.

Over the course of protracted litigation, the lower Courts had concluded that Google’s copying of the SE Code did not fall within the permitted fair use exceptions. However, in overturning the lower Courts’ decisions, the Supreme Court found that Google’s adoption of the SE Code in the circumstances of the case fell within the ambits of fair use. In particular, the Supreme Court was of the view that Google could not be deemed culpable of copyright infringement on the grounds that Google only copied what was needed to allow programmers to work in a different computer programming language, without discarding a portion of familiar programming language.

The decision, which is set to upend current thinking within the software developing community, extends the application of the fair use doctrine, in that rights held in copyright, will not be deemed to be infringed where the copied content is applied towards transformative use. Practically, the decision is poised to create wriggle room for developers to use existing codes within licensed software programs, so as to build interoperable platforms, without the risk of incurring liability for copyright infringement.

This view marks a radical shift from the exclusive protections granted under copyright and is likely to offset a multitude of renegotiations of existing multinational software licensing agreements in a bid to set out the permitted uses of licensed software.

Closer home, whereas the decision is of persuasive, rather than binding force in Kenya, the precedent is nevertheless likely to impact software developers and software companies alike, with the expanded use of the doctrine of fair use, quite consistent with the fair dealing doctrine provided under the section 26 (3) of the Copyright Act, 2001.

As such it will be critical for software developers and software companies to undertake a review of their licensing agreements including the terms and conditions to better safeguard their intellectual property.

Kirani Ayat (‘Kirani’) tweeted on 27th September 2022 that: “The president of Ghana has used my video ‘GUDA’ in this ad to promote Ghana. I was actively reaching out to the Ministry of Tourism in 2018/19 to use this video to push tourism in the North and got a ‘NO’ in reply, yet today it’s in an ad and no one has reached out to me for permission”.

Kirani’s tweet has attracted a lot of comments:

On 27th September, the Joy FM online platform published, ‘Kirani Ayat Calls Out Akuffo-Addo, Tourism Ministry after a promo video featured shots from his ‘Guda’ visuals’.

The Ghana Tourism Authority (GTA) issued a statement dismissing Kirani’s claims and argued that his rights to the content used for the promotional video by the president had not been infringed upon, since they obtained the right to use the contents from an agency.

Samsal, the creative agency mentioned by GTA, has stated that the video it created for GTA is not what has been published and that it never authorized GTA to publish the content.

BBC News Africa reported: “Ghana’s President Nana Akufo-Addo has been accused of using a musician’s work without permission or credit to advertise the country to tourists”.

The above comments raise legal issues related to copyright infringement in Ghana regarding content created by artists. This article examines regulation of copyright in Ghana and the legal issues arising in the Kirani case.

Copyright

Copyright is a right (both economic and moral) that enables creators of literary and artistic works such as writers, artists, painters, musicians, software developers, and others to receive recognition for their creative work. The rights are conferred in the expression and not dependent on registration. The right entitles the author of the creative work to:

• authorize or prohibit the use of their work by others;
• claim authorship of the work and demand mention whenever used; and
• receive compensation for the use of their work.

Effective Copyright System

The essence of copyright law is to confer rights on the author and protect his or her expression from unauthorized use. To effectively achieve that goal, an efficient copyright system must be anchored on three (3) pillars:

1. Appropriate copyright legislation – the Copyright Act, 2005 (Act 690) and the Copyright Regulations, 2010 (L.I 1962) cater to this.
2. Sufficiently developed system for management of rights. There are three (3) Collective Management Organisations (CMOs) at the moment, namely:

• the Ghana Music Rights Organisation (GHAMRO);
• the Audiovisual Rights Society of Ghana (ARSOG); and
• CopyGhana (a Reprographic Rights Organisation).

3. Enforcement – i.e. the system of sanctions to be applied when rights under the law are infringed.

Copyright Infringement

Infringement of copyright is the unauthorized use of copyrighted work in a manner that violates the copyright owner’s exclusive right to produce or perform the copyrighted work. Infringement includes piracy, plagiarism, duplication, distribution, and exhibition in public places. Most affected works are music, audio-visual work (films, music videos, etc.), books or literary work, and computer software.

Any such unauthorized use constitutes an infringement that breaches the author’s rights. Such breaches constitute an offense under the Copyright Law – which provides that offenses include reproduction, duplication, extracts, imitation, and importation (except for private use). A person found guilty of copyright infringement can face civil or criminal prosecution. The civil remedies available under the law include injunction, compensation, seizure, forfeiture, or destruction of offending materials.  In addition to civil remedies, the law provides criminal penalties for violations or infringements which include a jail-term and/or a fine.

Enforcement Measures

The system of sanctions to be applied when rights under the law are infringed are grouped as civil remedies, criminal sanctions, and border measures. A person whose copyright has been violated can approach the court for redress by way of civil action. The court may grant an injunction to prevent the infringement or prohibit the continuation of the infringement. Additionally, criminal prosecution can be initiated when a report is made to the relevant institution. In respect of imported goods, a report can be made to the Customs Excise and Preventive Service to detain the goods.

Legal Issues Arising – The Kirani Context

The issue arising in this case is that Kirani has alleged a breach of his copyright on the basis that permission was not obtained by the GTA for the use of his ‘GUDA’ video. If this allegation is true, it means Kirani can make a claim for copyright infringement. However, GTA will not be considered to be in breach where it is able to establish that it obtained the requisite permission for the use of the ‘GUDA’ video.

A number of legal issues arise based on the above facts: including whether the GUDA video is protected under law; who the GUDA video’s owner is; whether permission was granted by the owner; the rights granted and the terms on which they were granted.

Is the Material Protected Under Copyright Law?

Generally, the protection of copyright is not dependent on registration. Literary work is typically protected under law unless the work has fallen into the public domain. Work that has fallen into the public domain is work with expired protection, work of authors who have renounced their rights, and foreign work that does not enjoy protection in Ghana.

From the facts available, the GUDA video has not fallen into the public domain. Consequently, its use must be subject to permission from the author.

Identify the Owner

Identifying the work’s owner is crucial in obtaining permission. Some kinds of art, such as video content and recorded music, can involve multiple owners. The recognized organizations that currently manage copyright in Ghana are the CMOs listed above. Hence, persons who wish to use copyright work can contact the relevant CMO.

From the facts available, GTA has stated that it obtained rights from Samsal to use the GUDA video for a promotional video. The issue arising is whether the creative agency was authorized by any of the CMOs to grant GTA the right to use the GUDA video.

Rights to Use Copyright Work

Copyright holders have the right to permit others to use their work for agreed purposes. The granting of a permit can be done in one of two ways:

• Assignment – transfer ownership of the copyright to another person
• License- grant of a copyright license whereby another person (licensee) is allowed to use the work based on agreed terms.

Generally, licensing is the preferable method as it allows copyright holders to keep the copyright over their work.

1. Identify the Rights you Need

There is a need to identify the rights needed when asking for rights to use copyright work. Each copyright owner controls a bundle of rights related to the work, including the right to reproduce, distribute, and modify the work. Because so many rights are associated with copyrighted work, the rights needed must be specified.

The GTA has stated that per terms of the MoU[1] it executed with Samsal, Samsal was to “Deliver imaginative and impactful social strategies, such as content or documentaries for the use of GTA ‘as it so wishes”. It is unclear what right Samsal had that enabled it to grant GTA any rights in the GUDA video.

1. Term/ Payment Negotiation

The length of time for which you are allowed to use a work is often referred to as the ‘term’. Your rights under a license agreement will often be limited in duration.  If there is no express limitation on its use, you are allowed to use the material for as long as you want or until the copyright owner revokes the permission. In reality, the copyright owner can only grant permission for as long as the owner’s copyright protection lasts. Additionally, when negotiating permission to use copyright work, payment must also be negotiated.

From the facts, Kirani did not receive payment for the use of the GUDA video for the promotional video.

1. Get it in Writing

Relying on an oral agreement or understanding is not sufficient. The user and rights owner may have misunderstood each other or remembered the terms of the agreement differently. This can lead to disputes. It is essential that the two parties enter into a well-drafted license agreement that sets out the license’s use.

Conclusion

We must be reminded that the original intention of copyright law is not to prevent information usage but to protect against infringement. To achieve this, there must be a commitment to safeguarding the rights of both creators and the persons who seek to use their ideas. Many people who violate copyright law may do so simply out of ignorance. There is therefore a need to seek relevant advice prior to using the creative work of others. In the Kirani case, it is recommended that the parties negotiate a settlement – pursuant to which a license agreement is entered into that specifies the consideration payable to the author and terms under which GTA can use the GUDA video.

Intellectual property refers to inventions of the mind that are intangible in nature and are protected such as trademarks, Patents, Copyrights, and related rights and industrial designs.

They are a core component of most businesses in the 21st Century and valuable assets for which management efficiencies are as important as any other asset. The dynamics of globalization and the effects that it has on strategies for every business, whether national or multinational, require that businesses pay closer attention to opportunities that help maximize benefits to the company and reduce costs to free up resources for other strategic interests of the business.

Given its territorial nature, the protection of IP has often been undertaken by local, regional, and multinational entities at the national level. That means that subsidiaries or branches at the national level are left to determine and follow up on the protection and enforcement of IP rights in their respective jurisdictions. This in turn impacts the cost of protection and enforcement, quality control, and ultimately the overall business strategies of the group.

A number of regional and international frameworks for IP protection however exist that can help reduce dispersed protection measures and facilitate central management and uniform strategy formulation for the group without impacting on local peculiarities of the business. Though enforcement ultimately remains territorial, these regional and multinational processes greatly contribute to better and central control of enforcement strategies and facilitate the exchange of best practices.

The ARIPO System

In this edition, we provide commentary on the ARIPO System which is the key Africa region framework of significance to multinationals with Kenyan operations/interests.

ARIPO was the result of an idea mooted at a regional seminar on patents and copyright held in Nairobi in the early 1970s and the first draft agreement on the creation of a regional intellectual property organization was adopted in 1976 by a diplomatic conference – The Lusaka Agreement [also known as the draft Agreement on the Creation of the Industrial Property Organization for English-speaking Africa (ESARIPO)]. The idea was that the organization would serve mainly Anglophone countries. In practice that remains the case with very few exceptions. A number of lusophone and francophone countries have since joined ARIPO (The latest being the Republic of Sao Tome and Principe). Membership remains open to any member of the African Union or the Economic Commission for Africa.

The principal idea behind the establishment of ARIPO was the pooling of resources of member countries in industrial property matters in order to utilize the maximum available resources in these countries to ensure effective protection of industrial property, capacity building, and training of staff in their respective industrial property institutions, development, and harmonization of laws and general efficiencies.

Legal Framework

The Lusaka Agreement on the Creation of the African Regional Intellectual Property Organization (ARIPO)

The Lusaka Agreement was adopted at a diplomatic conference at Lusaka (Zambia) on December 9, 1976, and established ARIPO at Article 1 thereof.

Pursuant to its functions and powers under the Agreement (Article VII) the Administrative Council of ARIPO has developed protocols and regulations that form the background of the legal and operational design of intellectual property protection in member states under the system. These include:

The Harare Protocol on Patents and Industrial Designs within the Framework of the African Regional Industrial Property Organization

The Banjul Protocol on Marks; and

The Swakopmund Protocol on the Protection of Traditional Knowledge and Expressions of Folklore.

Membership to the Lusaka Agreement does not necessarily imply membership to the protocols. Each protocol applies to different aspects of intellectual property and membership to each is voluntary.

The Harare Protocol

The Harare protocol applies to the protection of patents and Industrial designs and currently has 19 contracting States, namely; Botswana, The Gambia, Ghana, Kenya, Lesotho, Liberia, Malawi, Mozambique, Namibia, Rwanda, Sierra Leone, Sudan, Swaziland, Tanzania, Uganda, Zambia, Zimbabwe and the Democratic Republic of São Tomé and Príncipe (the latest member as at August 19, 2014).

How the filing System works: brief overview

The Harare Protocol provides a framework for the filing and protection of patents and industrial designs within member states.  The Protocol is supplemented in its provisions by administrative regulations that make further and detailed provisions for the manner in which an application is treated from the date of filing to the grant of patent or refusal as the case may be.

There are principally two regulations under the Harare protocol in this regard;

1. The regulations for implementing the protocol on patents and industrial designs within the framework of the African Regional Intellectual Property Organization (‘the regulations); and
2. The administrative instructions under the regulations for implementing the protocol on patents, industrial designs and utility models within the framework of the African regional intellectual property organization (the Administrative instructions)

The regulations are made by the Administrative Council pursuant to section 5 of the Harare Protocol and mainly deal with substantive matters relating to the content of applications filed with the ARIPO office including on the requirements for patentability, the right of priority, Appeal procedures against decisions of patent examiners and treatment of PCT applications under the ARIPO system.

Administrative instructions, on the other hand, are made by the office of the Director General of ARIPO pursuant to rule 2(5) (a) of the regulations and mainly deal with the day-to-day administrative requirements of ARIPO including the formality details in respect of applications under the protocol, filing timings, fees payable for each service, detailed steps in the filing and examination of applications up to grant, notification and communication procedures, the forms to be used for various filings etc.

Patents

In summary, the ARIPO system is registration-based and subject to notifications of refusal by national offices whereas the PCT system is a filing system.

An applicant for the grant of a patent for an invention or the registration of an industrial design can, by filing only one application, either with any one of the Contracting States or directly with the ARIPO Office, designate any one of the Contracting States in which that applicant wishes the invention or industrial design to be accorded protection.

The ARIPO Office, on receipt of the patent application, undertakes both formality and substantive examination to ensure that the invention that is the subject of the application is patentable (i.e. it is new, involves an inventive step, and is capable of industrial application).

If the application complies with the substantive requirements, copies thereof are sent to each designated Contracting State which may, within six months, indicate to the ARIPO Office that, according to grounds specified in the protocol, should ARIPO grant the patent that grant will not have effect in its territory.

For industrial design applications, only a formality examination is performed. If the application fulfills the formal requirements, the ARIPO Office registers the industrial design which has effect in the designated States. However, the same right to communicate to the ARIPO Office within six months that the registration may not have effect in the designated States concerned is reserved.

The Administrative Council, at its Second Extraordinary session held in April 1994, adopted amendments to the Harare Protocol and its Implementing Regulations to create a link between the protocol and the WIPO-governed Patent Co-operation Treaty (PCT). This link commenced operation on July 1, 1994, and has the following effects:

Any applicant filing a PCT application may designate ARIPO which in turn means a designation of all States party to both the Harare Protocol and the PCT;

The ARIPO Office acts as a receiving office under the PCT for such States; and

The ARIPO Office may be elected in any PCT application.

All current Harare Protocol Contracting States are also signatories to the PCT.

The Banjul Protocol

The Banjul Protocol on Marks, adopted by the Administrative Council in 1993, establishes a trademark application filing system along the lines of the Harare Protocol. Under the Banjul Protocol, an applicant may file a single application either at one of the Banjul Protocol Contracting States or directly with the ARIPO Office. The application should designate Banjul Protocol Contracting States as the States in which the applicant wishes the mark to be protected once the ARIPO Office has registered it.

States currently party to the Banjul Protocol are Botswana, Lesotho, Liberia, Malawi, Namibia, Swaziland, Tanzania, Uganda and Zimbabwe. (Total: 9 States.). Kenya is yet to accede to this treaty so trademark filing can only be done locally or through the Madrid system as we shall see in the next edition of the newsletter.

Since 1997, the protocol has been extensively revised in order to make it compatible with the TRIPs Agreement and to make it more user-friendly.

Conclusion

The ARIPO system is highly advised for clients with regional interests. We represent a number of clients in patent applications using the system and recommend it for cost savings and efficient management of the application process (more so for bulk applications) in several member countries.

In the next edition of the newsletter, we shall provide commentary on international filing systems to give a broader perspective for multinationals operating in Africa and beyond.