Uganda has just discovered, at considerable expense, that in contract law it is not enough to be right — you must also be correct.
An international arbitration tribunal in London, UK, has ordered the government to pay Shs522 billion ($138.93 million) to Rift Valley Railways Uganda — not because Uganda was wrong to end the railway concession, but because it did not end it correctly.
That distinction matters enormously. The tribunal was unambiguous: RVR had underperformed, failed to meet freight targets, neglected assets, and defaulted on concession fees.
The government had every reason to pull the plug. But reason, in contract law, is not enough. Procedure is everything. Because Uganda did not follow the exact contractual steps required to terminate the 2006 concession agreement, it now faces a bill that is big enough to fund several social services projects.
To appreciate the irony, consider the full arc of this dispute. Less than a year ago, in July 2025, Uganda won decisively at the same London tribunal. RVR investors had filed a $2.3 billion claim alleging bad faith and sabotage. The tribunal dismissed every claim and ordered RVR to pay Uganda over $3.6 million in legal costs.
Then came April 2026. A separate ruling examined not whether Uganda was right to terminate the concession, but how it did so. The tribunal found the termination process itself breached the contract.
RVR’s claims for future profits were dismissed — the company couldn’t prove it would ever have been profitable — but the procedural breach alone generated a Shs522 billion award. This is what contractual negligence looks like when it catches up with you.
Some will argue that international arbitration is stacked against poor developing countries. That temptation should be resisted. The London Court of International Arbitration exists because global commerce requires a neutral forum where contracts — not political convenience — are the final authority.
In July 2025, that same system vindicated Uganda completely. Arbitration is not the problem. It is a mirror. And right now, it is reflecting something uncomfortable: the tendency to act on legitimate grievances without the discipline of contractually compliant processes. International tribunals do not ask whether you were angry.
They ask whether you followed the letter of the contract.
Of course, public anger over the matter is understandable.
Ordinary Ugandans, who had nothing to do with the 2017 termination decision, are now expected to fund a payout to a company that – by the tribunal’s own finding – failed its core obligations.
Across the continent, governments with perfectly valid reasons to exit bad infrastructure deals are losing arbitration cases because they exit badly – on mere sentiment and emotions.
The solution is not to shy away from private investment.
It is to build the legal and institutional competence not only to source competent and legitimate contractors but also to honour contracts as scrupulously as one negotiates them.
Shs522 billion is a brutal price for a procedural failure.
But if it forces a fundamental shift in how Uganda enters, manages, and exits contracts with international investors, it may yet prove instructive.
The alternative – paying again and again for the same lesson — is one this country simply cannot afford.
