Principles

·  CONFLICT OF LAWS — Foreign partnership doing business in Sudan — Right to sue in Sudan Courts.

·  PARTNERSHIP — Foreign firms — Exception from registration requirement — Partnership Registration Ordinance 1933, s. 4(a)

·  ADMINISTRATIVE LAW — Licencing — Traders Licence and Taxation of Business Profits Ordinance 1930, s. 4 — Failure to obtain licence — Effect on contracts.

·  CONTRACTS — Illegality — Effect of licencing requirement on contracts made by un-licenced traders — Traders Licence and Taxation of Business Profits Ordinance 1930, s.4.

An association registered as a partnership under foreign law is exempted from registration in the Sudan by Partnerships Registration Ordinance 1933, a. 4(a). and is entitled to all privileges accorded to firms registered under the Ordinance, including the capacity to sue in the Sudan Courts. A contract concluded by the local agent of a foreign firm, not properly licenced under the Traders Licence and Taxation of Business Profits Ordinance 1930. is not void for contravention of public policy since the Ordinance is designed for raising revenue, not for protection of the public.

An association registered as a partnership under foreign law is exempted from registration in the Sudan by Partnerships Registration Ordinance 1933, a. 4(a). and is entitled to all privileges accorded to firms registered under the Ordinance, including the capacity to sue in the Sudan Courts. A contract concluded by the local agent of a foreign firm, not properly licenced under the Traders Licence and Taxation of Business Profits Ordinance 1930. is not void for contravention of public policy since the Ordinance is designed for raising revenue, not for protection of the public.

An association registered as a partnership under foreign law is exempted from registration in the Sudan by Partnerships Registration Ordinance 1933, a. 4(a). and is entitled to all privileges accorded to firms registered under the Ordinance, including the capacity to sue in the Sudan Courts. A contract concluded by the local agent of a foreign firm, not properly licenced under the Traders Licence and Taxation of Business Profits Ordinance 1930. is not void for contravention of public policy since the Ordinance is designed for raising revenue, not for protection of the public.

An association registered as a partnership under foreign law is exempted from registration in the Sudan by Partnerships Registration Ordinance 1933, a. 4(a). and is entitled to all privileges accorded to firms registered under the Ordinance, including the capacity to sue in the Sudan Courts. A contract concluded by the local agent of a foreign firm, not properly licenced under the Traders Licence and Taxation of Business Profits Ordinance 1930. is not void for contravention of public policy since the Ordinance is designed for raising revenue, not for protection of the public.

Judgment

 Per M. A. Hasslb, J., concurring: Traders Licence and Taxation of Business Profits Ordinance 1930, a. 4 (a), does not exempt foreign partnerships from the re-quirement of registration, as it refers only to any company or associaion which is registered as a company ...“ but failure to register does not bar such partnerships from access to the Courts, nor does it invalidate their contracts.

Advocates: Ibrahim Ahmed Ibrahim…………….. for appellants

Abdalla Negib …………………………………..for respondents

Babiker Awadalla, 1., December 4, 1960:— The facts of this appeal are clearly set out in the judgment of the Honourable Judge of the High Court, (1959) S.L.J.R. 38, and we see n reason to restate them here.

The learned advocate for appellants is pressing two points:

(a) the capacity of the respondents to sue in the Sudan, and

(b) the legality of the transaction giving rise to these proceedings.

As to (a), he contends that the respondents’ firm, being a foreign firm created outside the Sudan and not registered in the Sudan, cannot sue on the contract, and as to (b), that as the respondents were not, at the time of making the contract, in possession of a traders licence under the Traders Licence and Taxation of Business Profits Ordinance, the contract is illegal.

* Court: M. A. Abu Rannat, C, I., M, A. Hassib, J. and Babiker Awadaila, J.

As regards the first point, the learned advocate for appellants failed to satisfy this Court as to what obligation there was on respondents to register in the Sudan under the Partnership Registration Ordinance 1933. Section 4 clearly exempts partnerships made abroad from the provisions of the Ordinance, for it says that those provisions do not apply to “any company or association .. . which is trading in the Sudan and is registered as such (i.e., as such company or association) under any foreign law.” It was proved by respondents. that the firm in question is registered under German Law at the Commercial Registry of the local court at Hamburg, and it is therefore no doubt an association which is registered as such association under a foreign law, and is therefore exempt from registration under our Ordinance and entitled to all the privileges which a firm registered under that Ordinance has. Amongst these is the right to sue and be sued in the firm name. Civil Justice Ordinance, Order V, Rule 1(1) says:

“Any two or more persons claiming or being liable as partners and carrying on business in the Sudan may sue or be sued in the name of the firm (if any) of which such persons were partners at the time of the accruing of the cause of action.”

As regards the second point, again there is no requirement that the foreign firm itself should obtain a traders licence, for Trader Licence  and Taxation of Business Profits Ordinance. s. 9(4) exempts foreign traders carrying on business in the Sudan from the requirement of obtaining a traders licence if they are solely carrying on business through an agent.

We are therefore going to assume in favour of appellants’ advocate that he meant to say that the agent himself in this case did not hold at licence at the time the transaction was concluded, and to see whether the wording of the Ordinance justifies the assumption that in such cakes the agent himself must be licenced under the Ordinance. As it was not contested by respondents that the agent was carrying on business  on their behalf within the meaning of Traders Licence and Taxation of Bussiness  Profits Ordinance, s. 4, there is no doubt that he should be licenced under its provisions. But what is the effect of failure to obtain a traders licence on contracts concluded by the defaulter ?

The learned advocate for appellants contends that this is an enactment that aims at the protect of the public, and as such any contract that is Opposed to the general policy and intent thereof must necessarily be illegal. He cites I Chitty, Contracts 521 (21st èd. 1955), where it is said that:

“If the object of the statute is the protection of the public from possible fraud or the promotion of some object of public policy, the inference is that contracts made in contravention of its  provisions are prohibited”

But the passage cited Continues to state that the contrary is usually the case where the object is merely the protection of the revenue. This Court has already decided in Abdo Rabbo Salih: Hussein v. El Sayed Salih Hussien  AC-REV.96..1955 that this Ordinance is a piece of adminstration  law or a law for raising revenue, and therefore, according to the criterion laid down by the authority quoted by the learned advocate himself, a contract made contrary to its provisions is not necessarily illegal. In fact, that was the decision in Abdo Rabbo Salih Hussein v. El Sayed Salih Hussein.

The above is sufficient to justify a decision against appellants on this appeal; but before concluding we would like to refer to the contention of the learned advocate for appellants, both in his submission in the Court below and in his grounds of appeal, that the issue as to non-payment was not proved by the respondents. lit fact the onus of payment is on appellants, and they should not be allowed to make capital out of a mistake in the fram ing of the issues. Before us, the learned advocate for appellants admitted non-payment but contended that the agreement was discharged by accord and satisfaction. That is an allegation which ought to have been clearly set out in the pleadings. Advocate for appellants has done his clients great harm by traversing the allegation of payment instead ofmakingaconfession and avoidance.

This appeal is therefore dismissed with costs.

M. A. Abu Rannat., C.J., December 4, 1960:— I concur.

M. A. Hassib, J., December 4, 1960:— I am of the same opinion. this appeal is a failure and should be dismissed.

Fuhrmeister and Company is a business name registered in the Sudan, but whether this name is representing a company or a firm was never disclosed in the plaintiffs’ plaint nor in the statement of claim.

However, it was contended in defence that plaintiffs were not a company incorporated in the Sudan, and as such were not capable of suing under the business name. The plaintiffs’ pleadings made no specific reply or explanation to the contention of defence, but on the general reply of joining issues made by the plaintiffs, the Court made the contention a point at issue (1st and 2nd issues), and the suit then proceeded for trial.

At trial the fact that the plaintiffs -are not a company, but merely a foreign firm, was just a surprise to the defence when it was disclosed by the statement of plaintiffs’ agent on oath that the plaintiffs were a partnership egistered in Germany according to German law. This witness produced documents duly authenticated by the German Embassy in Khartoum and the Sudan Ministry of Foreign Affairs, verifying the existence of the firm in Germany.

It is obvious that a partnership firm is not a legal person, but is merely a collective name of the individuals who are members of the partnership.

The law as to firms carrying on business in the Sudan is provided by Civil Justice Ordinance, Order V, and according to Rules I and 2 of this Order any two or more persons claiming as partners and carrying on business in the Sudan may sue in the name of the firm, and where a suit is instituted in the name of the firm, the plaintiffs are bound, on the demand by defendants or the Court, to deliver a statement containing the names and places of residence of all the persons constituting the firm.

The provision in Rule 2 is intentionally made to protect the public against fraud, and the defendants-appellants could have invoked Rule 2 for disclosure of the real persons making the firm, had it not been for the mis leading manner in which the plaintiffs put the plaint, the statement of claim, and also reply to defence. The plaintiffs in their pleadings never disclosed that they were suing as a firm, and that was the reason why the 1st and 2nd issues were framed for the trial with a view to ascertaining whether plaintiffs were suing as a company. This irregularity caused the perplexity of the defence when the plaintiffs assumed another attitude in proving their capacity by disclosing in the evidence of the plaintiffs’ agent that the plaintiffs are merely a limited partnership registered in Germany

In the light of this the learned advocate for appellants now contends that the respondents, being a foreign firm created outside the Sudan and not registered in Sudan, cannot sue for the contract.

It is admitted and also duly proved that plaintiffs are a foreign firm carrying on business in the Sudan under a registered business name. The question arising, therefore, is whether a firm of this nature is exempted from registration in the Sudan, and if the answer is in the negative, can such a firm sue on the contract?

The law in the Sudan is the Partnerships Registration Ordinance 1933. By Section 5(1) of this law the registration of every partnership carrying on business in any town in the Sudan is required. There it is provided that no partnership shall commence business before registration. Exception to this rule in respect of partnerships carrying on business in the Sudan is provided by Partnerships Registration Ordinance 1933, s. 4(b), which reads:

“The provisions of this Ordinance shall not apply to:

(b) any partnership of which the total capital is less than £S.500 in value.”

From the provision of law referred to above it is clear that registration of plaintiffs’ firm in Sudan is required by the law. Section 4(a) does not exempt plaintiffs’ firm from registration in the Sudan. Section 4(a) exempts only companies or associations which are registered outside the Sudan only as companies. Foreign partnerships are not covered by this section. The section says: “which is registered as a company. Plaintiffs are not a company registered outside the Sudan, and therefore Section 4(a) does not apply to their case.

Section 4(a) reads as follows:

“The provisions of this Ordinance shall not apply to:

(a) Any company or assocation which is registered as a company with or without limited for the shareholders under any ordinance for the time being in force in the Sudan or under day proclamations or which is trading in the Sudan and is registered as such under any foreign law.”

Plaintiffs, being a firm registered as a firm outside the Sudan are under a duty to register their company in the Sudan before commencing business in the Sudan. This is the Sudan law.

Let us now consider the consequences of failure of plaintiffs’ firm to register itself in the Sudan on the contracts entered into by the plaintiffs in the Sudan. Can such a firm sue on its contracts? The answer to this question depends on whether the Ordinance is intended to protect the public or is merely for the protection of the revenue.

The preamble of the Ordinance states the object of its enunciation. It is an Ordinance for registration of partnerships only. The point was al ready referred’to in Abdo Rabbo .Salih Hussein: v. El Sayed Salih Hussein, AC-RE V-96-1955 as a dictum. In the result I am of opinion that though foreign partnerships are not exempted from registration, failure to register any partnership does not by itself render the contract entered into by a firm not registered illegal.

I have already mentioned that there was a mistake in the pleadings and that by that mistake the defendants were not able to invoke Civil Justice Ordinance, Order V, Rule 2, in order to avoid confusion at trial.

The question now arises whether the irregularity in procedure depriving the defence from availing themselves by the provision of Rule 2 amounts to a defect in the trial gross enough to render the trial of the case most unfair and justifies intervention by this Court by an order of retrial.

In considering this point, I do not see that the irregularity is so grave. It is true that Civil Justice Ordinance, Order V, Rule 2 is a protection to the public, and the defendants could not invoke it unless they were aware what the plaintiffs were, but owing to the omission the defendants were not in a position to demand disclosure of the names and places of the persons constituting the firm before trial. However, this disclosure of the names was actually made by the plaintiffs’ agent at trial when he produced on oath the certificate of registration of the firm in Germany, and that was what the law required by Rule 2. The defence cannot go further and question the existence of the firm in that manner. The Court has no jurisdiction to direct cross on the point or to order a separate issue to determine the question whether a person whose name has been disclosed was a partner at the time of the accruing of cause of action. The authority for this principle is to be found in Abrahams and Co. v. Dunlop Pneumatic Tyre Co., (1905) 1 K.B. 46.

As to the second point of illegality of the transaction owing to the fact that the plaintiffs were at the time of dealing not holders of a traders licence, I agree that such failure does not invalidate the contract. It is a question depending on whether the Ordinance is a revenue law or intended for the protection of the public.

McCardie  J., in Brightman and Co. v. Tate (1919) 1 KB. 463, 469, made a statement of distinction between the two kinds of contract. He referred to a dealer who was dealing in tobacco without having a licence in compliance with law. He said:

“I think the object of the legislature was not to prohibit a contract of sale by dealers who have not taken out a licence pursuant to the Act of Parliament. If it was, they certainly could not recover, although the prohibition were merely for the purpose of revenue.” (Quoting from Smith v. Mawhood, (1845) 14 M. and M.452, 463)

In the Sudan the point was already tackled in Abdo Rabbo Salih Hussein v. El Sayed Salih Hussein, supra, and needs no further trouble.

In the result, I agree that the appeal be dismissed.

Editors’ Note: The case referred to in the judgment, Abdo Rabbo Salih Hussein V. El Sayed Salih Hussein AC-REV-96-1955 (unreported) held, per Soni, J., that a Sudanese who held a trader’s licence for the sole purpose of maintaining in trade a non-Sudanese partner (who could not obtain such a licence) was not precluded from suing on a contract by virtue of the illegality of the partnership under Traders Licence and Taxation of Business Profits Ordinance 1930, s. 5, since the Ordinance was “ . . a piece of administrative law or a law for raising revenue, It does not necessarily follow that all transactions to which a penalty is attached become illegal in the sense that the Courts refuse their help regarding contracts arising out of them.”

(HIGH COURT)

MOHAMED AHMED EL BAHI v. EGYPTIAN IRRIGATION DEPARTMENT

HC-CS-437-1959

JURISDICTI0N — Sovereign immunity — Waiver by appearance  and plea to merits.

CONFLICT OF LAWS — Sovereign Immunity — Waiver by apearance and plea to merits.

Defendant, a foreign government, waived its right to plead sovereign immunity by appearing after a default decree; applying to have it set aside on the merits with no special plea to jurisdiction, and accepting issues framed by the Court.

M. Y. Mudawi, P. J., February 18, 1961:— The plaintiff in this action is a Sudanese car-driver once employed by defendants the Egyptian Irrigation Department situated in Khartoum. Following a dispute between the two parties the plaintiff raised this action claiming difference of pay from 1952.

The plaint was entered into the Court books on October 29, 1959 and action was allowed on October 31, 1959. The case was fixed fo first appearance for November 25, 1959.

On November 8, 1959 summons was served on defendants through a certain Kamal Riad, who put under his name the words “for the Egyptian Irrigation Department in the Sudan.”

On November 25, 1959 plaintiff appeared represented by advocate Abdulla El Amin and defendant was represented by advocate Abdel Rahman Yousif. Advocate Abdel Rahman Yousif accepted the plaint as a sufficient statement of claim and was given a period of 15 days to enable him to file his defence. The case was fixed for December 26, 1959.

On December 26, 1959 advocate Abdulla El Amin appeared for plaintiff but defendants failed to appear and hence a default decree was passed in favour of plaintiff.

On December 26, 1959 defendant appeared after the default decree was passed and applied to set it aside.

On January 16, 1960 the default decree was set aside and defendants were ordered to pay £S. 10 as costs.

Defendants then filed a statement of defence in which he rejected the claim on its merits without making any reference to the competence of our Courts to try the cause.

In the light of the pleadings issues were framed sometime in April, 1960, and the case was fixed for agreement on issues on April 30, 1960.

On April 30 both parties, subject to one or two amendments suggested by defendants, accepted the issues framed by the Court.

The case after a comparatively short time on the general list was fixed for hearing on October 24 and 25, 1960.

On October 24, 1960 both advocates appeared and were told that the Court was busy dealing with a major court, and so the hearing was adjourned for November 30, and December 1, 1960.

It was during this interval of time between October 24, and November 30, that advocate for defendants underwent a change of heart and mind and decided tO invoke sovereign immunity.

In view of this new situation the Court had to frame a preliminary issue:

Did the Government of the United Arab Republic submit to the jurisdiction of our Courts of justice? And if so, can the submission be withdrawn?

The principle of sovereign immunity, which we hope should not be confused with diplomatic immunity is a cardinal principle of Private Inter national Law. Simply put, it is “no state can claim jurisdiction over another”. That is, a sovereign state cannot be made against its will a party to any litigation in the Courts of the Sudan. But this immunity is not an absolute one, for the sovereign state may voluntarily waive it and bring itself within the jurisdiction of the Court. The waiver can be effective only if the sovereign power seeks the aid of the Court as a plaintiff, or where in answer to a summons it appears as a defendant and without challenging the jurisdiction of the Court defends the action on the merits.

Such are the rules of Private International Law governing sovereign immunity. However, in order to apply these rules to the issue in question, we must attempt to find out whether behaviour of defendants amot to submission to the jurisdiction of the Courts of the Sudan. Defendants as already shown signed the summons served on them and entered an appearance in the first hearing, in which they were given time for preparing their defence. They utilized this time in studying the labour legislation in this country and in Egypt, and so they ultimately filed a detailed statement of defence and later accepted the issues which were amended to fall in line with certain objections made by them. In the course of these activities defendants never made .any reference, not even obliquely, to their being immune from our jurisdiction, in spite of the fact that they left no stone unturned in their search for defences. Even in their application to set aside the default decree, an application implying that they considered themselves bound by the default decree unless it was set aside, they did not mention defence of immunity.

It was only after issues were framed and a date was fixed for the hear ing that the objection to the jurisdiction was made. In my opinion it was too late. The deadljn for such a defence is the time the defendants are faced in Court with a clear claim. It is at that moment that they either discuss the merits and the subject themselves to jurisdiction or else challenge the jurisdiction irrespective of the merits, in which case they will not be taken to have submitted.

In view of this I decide that the Governnient of the United Arab Republic had clearly and unequivocally submitted to the jurisdiction of the Courts of the Republic of the Sudan.

The next question is whether this submission can be withdrawn before the case is determined. My answer is, no, it cannot. Submission covers the proceedings up to the judgment stage and indeed up to the final appeal.

“          Such submission gives the court power to enter judgment, to hear an appeal and to award costs against the foreign sovereign; but not to enforce a judgment by execution.” Graveson, Conflict of Laws 331 (3rd ed. 1955)

Both issues are therefore decided in favour of plaintiffs and the plea of immunity is rejected.