Aya Investments Uganda Limited v Industrial Development Corporation of South Africa Limited (Civil Reference 20 of 2023) [2023] UGCA 276 (23 October 2023)


THE REPIIBLIC OT' UGANDA

# THE COURT OF APPEAL OF UGATTDA AT I(AMPALA

(Coram: Egonda-Ntende, Mugenyi & Kihika, JJA)

# CIVIL REFERENCE NO. 20 OF 2023

(Arising from Civil Applications No. 410 & 411 of 2023)

AYA TNVESTMENTS (U) LTMTTED APPLICANT

VERSUS

INDUSTRIAL DEVELOPMENT CORPORATION OF SOUTH AFRICA LIMITED RESPONDENT

Civil Reference No. 20 of 2023

## RULING OF THE COURT

#### lntroduction

- 1. This Reference was brought by Aya lnvestments (U) Limited ('the Applicant') in respect of the Ruling and orders of this Court in Civil Application No. 410 of 2023 (Gashirabakye, JA, sitting as a single judge). That application sought an order staylng the execution of an arbitral award that was the subje ct d(matter of Miscellaneous Cause No. 58 of 2021 until the determination of Civil Application No. 271 of 2023 in which leave is sought to appeal the ruling in Miscellaneous Application No. 58 of 2021. - 2. The background to this Reference is as follows. Between 2007 and 2017 the Applicant and lndustrial Development Corporation of South Africa ('the Respondent') executed various Financial Credit Agreements (FCAs), as well as Security Agreements, to finance the construction of the Pearl of Africa Hotel in Kampala, Uganda. - 3. Following a breakdown in the parties' business relationship and the supposed default of the Applicant on its financial obligations under the above agreements, the Respondent instituted foreclosure proceedings under the Ugandan legal regime as provided under the Security Agreements. The Applicant objected to these proceedings in deference to the reference of the dispute to arbitration as provided in the FCAs. lndeed, vide Miscellaneous Application No. 1166 of 2017 the Applicant obtained restraining orders in respect of the Respondent's foreclosure proceedings and a reference of the dispute to arbitration in South Africa. - 4. ln the meantime, given the purported attempt by the Respondent to continue with its foreclosure proceedings, the Applicant instituted CivilSuff No. 937 of 2017 that was inter a/ra grounded in contempt of court and breach of contract; to which the Respondent responded by filing Miscellaneous Application No. 204 of 2018 that sought to refer all the matters in the said suit to arbitration. The Applicant subsequently obtained a spot decision from this Court vide Civil Application No. 57 of 2019, which stayed the determination by the High Court of any matter arising

from the said civil suit pending the determination of that civil application. That ruling has not been delivered to date.

- 5. An arbitral award was subsequently made in the Respondent's favour, which the said party successfully registered as a decree of the High Court of Uganda vide Miscellaneous Cause No. 58 of 2021. The Applicant thereupon lodged Miscellaneous Application No. 271 of 2023, an application for leave to appeal the High Court's decision in Miscellaneous Cause No. 58 of 2021; as well as Civil Applications No. 410 and 411 of 2023, applications for substantive and interim orders of stay of execution of the arbitral award respectively. - 6. Civil Application No. 410 of 2023 was heard on its merits and determined in favour of the Respondent. Dissatisfied by the ruling of the single judge of this Court, the Applicant lodged this reference to three judges of the Court. Before the reference could be heard, however, the Applicant withdrew Miscellaneous Application No. 271 of 2023, the application for leave to appeal Miscellaneous Cause No. 58 of 2021. - 7. At the hearing of the Reference, the Applicant was represented by Messrs. Godfrey S. Lule, Fox Odoi, Gibson Munanura, Henry Byansi and Derek Nkwasibwe, while the Respondent was represented by [\Iessrs. Timothy Masembe Kanyerezi, Hussein Gulam Dawud, Patrick Turinawe and Phillip Muhumuza.

## Determination

8. Mr. Kanyerezi raised a preliminary point of law that the application for leave to appeal (upon which the stay of execution was premised) having been withdrawn, there was no legal basis for the present reference and it therefore must fail. On the other hand, learned Counselfor the Applicants declined to specifically address the Court on that issue, contending that the Respondent's commencement of arbitral proceedings in South Africa amounted to contempt of the spot orders issued in Civil Application No. 57 of 2019. We understood Counsel to argue that contempt of court is an illegality that would give raise to an automatic right of appeal.

- 9. Upon careful consideration of the court record, we find that the present Reference is indeed premised on the decision of a single judge of this Court in CivilApplication No. 410 of 2023. Paragraph (a) of that civil application quite succinctly states that orders of stay of execution/ enforcement sought therein should ensue 'pending final determination of the Main Application 271 of 2023 seekinq Leave to Aooeal the Hioh rrt Rulino in Miscellaneous Aoo on No 58 of 2021' (Our emphasis) - 10. It follows therefore that Miscellaneous Application No. 271 of 2023 having since been withdrawn by the Applicant, the substratum of the present Reference stands removed, leaving it with no legal or procedural basis. The supposedly automatic right of appeal on the basis of contempt of courU illegality would not cure this defect as it was not pleaded either by an amendment to the original application or to the present Reference. - 11.ln any event, whereas the orders in Civil Application No. 57 of 2019 might have been binding on matters within the Ugandan courts, they would not have been binding upon the arbitral proceedings that were already ongoing in South Africa pursuant to the court orders issued in Miscellaneous Application No. 1166 of 2017. Those orders were never appealed. lt is these court-sanctioned arbitral proceedings that indeed yielded the arbitral award in issue presently.

## Conclusion

t

12. We therefore find that following the withdrawal of Miscellaneous Application No. 271 of 2023, the application upon which the single judge decision referred to this Court was premised, this Reference is misconceived and improperly before this Court. We would therefore dismiss this Reference with costs to the Respondent.

It is so ordered

Dated and delivered at Kampala this $\frac{23}{3}$ ... da day of OCRESER $.2023.$

San

Frederick M. S. Egonda-Ntende **Justice of Appeal**

midligenyi.

Monica K. Mugenyi **Justice of Appeal**

Oscar. Justice of Appeal