The Supreme Court Of Kenya Has Ruled Against Uber In A Landmark Decision
The Supreme Court of Kenya has ruled against Uber in a landmark decision
Uber Kenya Limited was sued by a total of 34 plaintiffs in 2016. What is the basis of their argument? Uber and its affiliates broke the terms of an online contract that Kenyan drivers had signed.
A minimum of $0.54 per kilometer traveled and a minimum fare of $2.71 were stipulated in the contract, which required the plaintiffs to transport Uber's Kenya customer base for a minimum of $2.71. According to the terms of the agreement, Uber Kenya Limited retained a 25 percent cut of the overall profits from each ride.
In July 2016, Uber reduced its minimum rate per kilometer traveled to $0.32 and its minimum fare per trip to $1.81, respectively. They claimed that this was a breach of contract because it prevented them from earning money as Uber drivers or from maintaining vehicles that had been purchased to comply with Uber standards.
However, Uber Kenya Limited, on the other hand, had a different take on the situation. They claimed that the group of 34 drivers had not entered into contracts with them, but rather with Uber BV, a private limited liability company based in the Dutch capital of Amsterdam. Because of this, Uber Kenya Limited claimed that it was not responsible for any contractual obligations that were breached.
According to the High Court of Kenya's ruling this week, after years of litigation in which drivers fought to establish that Uber Kenya Limited and Uber BV are the same entity, far-flung multinational technology companies and Kenya's burgeoning tech industry are increasingly at odds with one another.
The Corporate Veil
Uber BV is an Amsterdam-based company that owns the intellectual property rights to the Uber mobile application. Uber Kenya Limited, which operates as a subsidiary of Uber, is in charge of contracting Uber drivers in the country of Kenya. Despite the fact that Uber BV claimed to be a separate legal entity from Uber Kenya Limited, the Kenyan High Court determined that the two businesses were inextricably connected.
The evidence presented to the court established that the group of Uber drivers used the same email address and retained the same legal counsel in order to resolve their legal disputes in the court of law.
According to Justice Francis Tuiyott of the Milimani court, this pierced the conglomerate's "corporate veil," making Uber Kenya Limited and Uber BV liable to the plaintiffs in their lawsuit against the conglomerate.
The Relationship Between Uber and Its Drivers
It is asserted by Uber as a business that it does not directly employ drivers, but rather serves as a middleman between drivers and customers. Resulting from this tangled web of relationships, the company has found itself in courtrooms around the world.
To force Uber to treat drivers as full-time employees with benefits rather than independent contractors, a group of South African lawyers joined forces with an international law firm in April to file a class action lawsuit against the company.
Uber has also been in and out of court in the United Kingdom over how it classifies its drivers, which has been a source of contention for the company. It took the company until February to finally agree to treat drivers as employees, following a defeat at the Supreme Court. The Amsterdam District Court recently ruled that Uber's intermediary status ruling was unconstitutional, concluding that drivers are, in fact, employees of the organization.
In Kenya, the distinction between Uber as an intermediary and Uber as an employer becomes even more blurred.
Uber employed over 12,000 drivers in Kenya as of November 2020, according to company statistics. While a portion of Uber's fleet is owned by the company, the vast majority is not.
Driving for private subcontracted companies, which operate their own fleet of vehicles, is an option for drivers who are unable to purchase their own vehicles. While others are employed as private chauffeurs, their employers have granted them permission to use their vehicles as Ubers in between pickups.
This third-party relationship causes Uber drivers in Kenya to earn even less than the cut they receive from the company themselves.
Kenya's ongoing petrol price hikes, which have pushed fuel prices to an all-time high, are a contributing factor to lower household incomes.
The Chairman of the Kenyan Digital Taxis Association, David Muteru, claims that Uber was unable to mitigate the financial impact of the increase in the price of gasoline on drivers.
"They did not raise the price of their tickets. rather than that, they introduced new, less expensive products, which were well received "In an interview with TechCabal, Muteru explained his reasoning.
Currently, Muteru claims that he has been deactivated from the Uber app as a result of his activism, which was true at the time of this writing.
Uber's prices have been consistently reduced in order to meet the needs of the Kenyan marketplace. Customers who have used the ridesharing app for more than two months have received a weekly discount of 25 percent. This is an attempt to compete with Bolt, which is also making headway in Kenya. The fare reduction is then passed on to the driver, who is then reimbursed.
In Conclusion
Because of this, Uber cannot be held solely responsible. Because policymakers see Uber's entry into rapidly growing African cities as a red flag indicating that the continent is on the right track, they are allowing it to pursue its strategies in those cities. Because a city can use Uber to get around, it is able to put off the urgent need for reliable public transportation.
When it comes to the country's transportation infrastructure, Uber drivers in Kenya are well aware of the company's importance. Rather than calling for an outright ban on Uber in Kenya, David Muteru and his colleagues are advocating for more transparent regulation that will result in a more transparent relationship between the company and its contracted drivers.
Regarding the current state of affairs, Muteru described it as "obscure." "In order to begin, Uber should recognize driver representation through legally recognized organizations. The ultimate goal is to obtain compensation for the losses that have been suffered "
Will the investment, on the other hand, be worthwhile in the long run? Uber and other large corporations can keep up in a foot race, but early-stage local technology companies can't keep up. If this trend continues, large multinational corporations and local technology companies that were hoping to profit from Kenya's digital revolution may find themselves priced out of the market.
