CORONAVIRUS DISEASE OUTBREAK: SOME LEGAL CONSIDERATIONS FOR BUSINESSES IN UGANDA

By Jonathan Kiwana,David F.K. Mpanga Thursday, February 20, 2020
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On 30 January 2020, the World Health Organisation (WHO) declared the coronavirus disease (COVID-19) a public health emergency of international concern. First discovered in Wuhan City of the People’s Republic of China’s Hubei province, 71 429 people have been affected with the disease as of 17 February 2020 with cases being reported in Australia, France, India, the People’s Republic of China (PRC), the Philippines, Singapore, Thailand, the United Kingdom and the United States.

According to WHO, infection with the coronavirus can cause mild symptoms including a runny nose, sore throat, cough, and fever.  It can be more severe for some people and can lead to pneumonia or breathing difficulties.  More rarely, the disease can be fatal. Older people, and people with pre-existing medical conditions (such as, diabetes and heart disease) appear to be more vulnerable to becoming severely ill with the virus. As of 17 February 2020, 1 874 people had died as a result of infection with the coronavirus.

The coronavirus is a respiratory virus, which spreads primarily through contact with an infected person through respiratory droplets generated when a person, for example, coughs or sneezes, or through droplets of saliva or discharge from the nose.  Even though no cases have been reported on the African continent yet, businesses in Africa, and Uganda in particular, have or will be affected by the virus. It is also feared that with continued international travel, the cases could soon be reported on the continent and more specifically East African countries. 

This article sets out some legal issues businesses, companies and other entities should take into account in line with the WHO’s declaration of a public health emergency of international concern.

Force Majeure, Frustration of Contract and Material Adverse Change considerations

Many of the goods, services and labour on the continent are from the PRC. With the increasing travel restrictions, quarantines and fears surrounding the outbreak of the Coronavirus disease, many suppliers, contractors and service providers may not be able to fulfil their contractual obligations.

Where such contracts contain a force majeure provision, this may be invoked to release a party from its provisions under the contract or to require it to mitigate loss under such a contract in spite of the damage suffered.

Where a contract does not hold a force majeure provision, parties may be discharged from their contractual duties in accordance with the common law principle of frustration of contract also set out under section 66 of the Contracts Act, 2010. 

Similarly, under financing agreements, the outbreak of the coronavirus may be considered as a material adverse change in the financial conditions of a party requiring a fundamental revision of the agreement especially where a party is unable to meet its financial obligations due to the outbreak of the virus. In some instances where a party is unable to meet its financial obligations due to the coronavirus disease outbreak, an event of default may be triggered.

Health and Safety considerations

Section 13 and 14 of the Occupational Health and Safety Act No.1 of 2006 imposes a duty on an employer to ensure a safe and healthy work environment for employees. This duty requires that an employer take active steps in ensuring that employees are safe and healthy at work. A failure in regard to this duty may attract legal liability.

In the wake of the coronavirus disease outbreak this duty may mean cancelling of non-essential trips to the PRC, in particular Hubei Province which has been worst hit by the virus, and other countries in proximity to it or where the virus has been reported. (Already the Government of Uganda has cautioned citizens from travelling to the PRC and major airlines have cancelled trips from Entebbe Airport to the PRC).

Employers should also appraise themselves on what practical things they may do to protect employees and equally train employees on the same: generally, the WHO has encouraged that everyone take active steps to practice respiratory hygiene.

Employers may also consider emergency measures to protect employees such as requiring the use of Personal Protective Equipment (PPE) and sanitary gels when handling packages delivered from outside the country or when travelling in areas where the virus has been reported. An employer will generally fulfil its obligations in regard to health and safety by consulting with a health and safety expert and accordingly developing appropriate health and safety measures.

Employment law considerations.

Human Resource personnel and employers in general may want to consider emergency measures in light of the coronavirus disease outbreak. Employers may have to ask that employees who have recently travelled to areas where the virus has been reported be screened before reporting back to work. Where such screening returns positive, employers should consider granting such employees extended sick leave to protect other employees or asking such employees to work remotely.

In instances where many staff members are unavailable due to the virus, employers may consider taking on temporary staff on special contract designed to meet this need and yet complying with the Employment Act, 2006.

However, whatever measures an employer takes, these must be set out in clear terms to reflect them as only emergency/ temporary measures so as to avoid setting unsustainable precedents at the workplace. Furthermore, while being vigilant, employers ought to watch that they do not act in a discriminate manner or in such a way to stigmatize/ ostracise certain people groups such as Chinese employees as this too may attract legal liability.

Insurance considerations

Insurers both health and travel may have to prepare to pay out more than they anticipated in light of the outbreak of the coronavirus especially since measures of controlling and preventing the spread of the virus are only being developed/ learned over time.

Businesses may also have to consider taking out insurance to cover the risks that may arise due to the outbreak of the coronavirus disease. For example, those involved in the exporting of goods and labour may now incur increased or considerable delays or even failure to deliver. These losses/ inconveniences may be mitigated by taking out some sort of insurance cover.

Ultimately, the steps one may take in light of the outbreak of the coronavirus disease will take into account individual circumstances which we ae happy to discuss with you if you would like.

This article is not intended to serve as a substitute for legal advice but rather only to point out some of the legal issues that one may have to consider; advice may vary from one case to another.