International Tribunal dismisses $2.3bn RVR suit against Uganda
The International Arbitration Tribunal has dismissed, with costs, a suit filed against Uganda by the Rift Valley Railways (RVR) consortium over the termination of a railway concession agreement in 2017.
In a ruling delivered on July 22, the London-based tribunal rejected all claims and a $2.3 billion compensation demand made by RVR Investments (Pty) Ltd (RVRI) and KU Railways Holdings Limited (KURH).
The tribunal instead ordered the RVR consortium to pay Uganda $3.6m (about Shs 12 billion) in legal costs and £200,369.11 in arbitration costs.
Uganda, along with Kenya, had long accused RVR of failing to meet key obligations under the 25-year concession agreement, including the failure to meet freight volume targets and improve the Uganda Railways assets and overall network performance.
Although Uganda initially issued a notice of termination, it was withdrawn in 2017 following a mutual agreement in which RVR investors agreed to drop ongoing court cases.
However, in 2018, citing persistent underperformance and frustration with the concession’s progress, Uganda’s ministry of Finance, Planning and Economic Development officially terminated the deal and ordered RVR to vacate operations.
This led to the initiation of arbitration proceedings by RVR on April 2, 2020, under the UNCITRAL Arbitration Rules (2010) before a three-member tribunal seated in London. The hearing was held in March 2024.
RVR, the lead investor and concessionaire for both the Kenya and Uganda Meter Gauge Railway (MGR) concessions, filed claims against both governments, alleging: breach of bilateral and concession agreements, failure to harmonize operational standards across the two countries, adverse impacts from the development of the Standard Gauge Railway (SGR), repudiation of agreements in favor of SGR, and deception regarding the long-term viability of the MGR network.
RVR sought over $2.3 billion in damages. However, following a lengthy hearing and detailed review of the evidence, the tribunal rejected all claims. It specifically found that Uganda had not breached its harmonisation obligations and that the termination of the Uganda concession agreement was due to multiple independent failures by RVR, including poor performance and mismanagement.
Throughout the proceedings, Uganda maintained that the termination was lawful and justified by RVR’s consistent failure to meet freight targets and maintain infrastructure as agreed.
In a statement issued following the ruling, the Ugandan Judiciary reaffirmed Uganda’s commitment to fair and transparent investment partnerships and the responsible stewardship of public resources. Uganda was represented in the arbitration by the Attorney General’s Chambers, along with legal counsel from Curtis, Mallet-Prevost, Colt & Mosle LLP and K&K Advocates.
