Zanzibar court strikes down law limiting liquor importers

Unguja. The High Court in Zanzibar has struck down a key provision in the Liquor Control Act (LCA), calling it unconstitutional. The law, enacted in 2020, limited the number of companies allowed to import liquor to just three.

Judge George J. Kazi ruled Section 33(1) of the LCA “inoperative” and “a nullity in law,” effectively rendering it unenforceable. The section restricted import permits to Zanzibari-owned businesses and capped the total number of permits at three.

The case was brought by Quality Meat and Beverage Supplies (QMB) after they were denied a liquor import license due to the limitations in the LCA of 2020.

 The court’s decision now compels the Zanzibar Liquor Control Board (ZLCB) to grant QMB their previously denied license and return any seized containers and their sale proceeds.

Judge Kazi found the restriction on import permits violated several fundamental rights enshrined in the Zanzibar Constitution, including the freedom to conduct business and the right to earn a living.                                                    

The judge highlighted that the Constitution protects citizens’ right to pursue business ventures for their livelihood. Section 33(1), in his view, discriminated against those seeking to enter the liquor import market, unfairly limiting opportunities to just three entities.

The Judge pointed out that both the Zanzibar Constitution and the Fair Competition and Consumer Protection Act (FCFCPA) prohibit businesses from acting in a way that stifles competition or hinders new entrants in the market.

He concluded that any legislation containing provisions contradicting the FCFCPA “will not only lack a force of law but will also contravene section 10 (d) of the Constitution.”

The Judge further questioned the justification provided by the government for the restriction. While the government argued it was necessary to control excessive liquor imports, Judge Kazi noted the absence of evidence supporting this claim.

He pointed out that the law lacked any regulations to limit the quantity of liquor even the three licensed importers could bring in.

The Judge specifically addressed the government’s failure to present evidence: “Is there excessive liquor importation in Zanzibar that is beyond the market demand? Does the law impose any restriction against the three licenced importers on the quantity of liquor to be imported…?”

 The Judge concluded his ruling by highlighting that the government “did not address the Court on those questions.”

According to the petition filed by QMB, they had ordered merchandise to avoid delays and customer inconvenience before their previous license expired and their renewal application was rejected.

These goods were subsequently detained upon arrival at the Zanzibar port and slated for auction. QMB argued that the LCA was arbitrary, violated the Constitution, and contradicted the FCFCPA.

The Court’s decision is a victory for QMB and paves the way for increased competition in Zanzibar’s liquor import market.

 The ruling also sets a precedent for challenging laws deemed anti-competitive and restrictive of business freedoms.  This comes at a time when three other importers ZMMI, One Stop and Scotch Store who were this year denied licences have cargo worth billions being held at the port of Malindi.

 It, however, remains to be seen whether the Zanzibar government will appeal the decision or seek to amend the LCA to address the concerns raised by the court.