Isabirye v Wakainja & 2 Others (Arbitration Cause 18 of 2023) [2024] UGCommC 131 (29 April 2024)

#### 5 **THE REPUBLIC OF UGANDA**

# **IN THE HIGH COURT OF UGANDA AT KAMPALA**

# **[COMMERCIAL DIVISION]**

### **ARBITRATION CAUSE NO. 0018 OF 2023**

# **[ARISING OUT OF CAD/ ARB/ NO.11 OF 2016]**

10 **ISABIRYE JOHN PADDY TEKULE :::::::::::::::::::::::::::::::::::::::::: APPLICANT**

# **VERSUS**

- **1. WAKAINJA JOHN PATRICK** - **2. KAGOYE SAMANYA FRED** - **3. IBINGA SAMUEL WAGHATA RESPONDENTS**

# 15 **BEFORE HON. LADY JUSTICE HARRIET GRACE MAGALA**

#### **JUDGMENT**

#### **Background**

This cause was brought by way of chamber summons under Section 34, 35(1) and 36 of the Arbitration and Conciliation Act Cap 4 and Rule 13 of the Arbitration Rules

20 for orders that:

- i. The arbitral award CAD. ARB No. 11 of 2016 issued on the 30th day of June, 2017 be recognized. - ii. The interim award issued on the 8th day of November, 2016 be recognized. - iii. A decree does issue in terms of both the awards and the same be enforced. - 25 iv. The Respondents pay costs of this application.

#### Background

The application was supported by an affidavit sworn by Applicant wherein he stated that; the Applicant and the Respondents entered into a partnership in the

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5 name of Townside High School in Busembatia and executed a partnership deed on the 28th day of March, 2000 wherein all parties agreed that in the event of any dispute arising, the same would be referred to Arbitration. An arbitrator was appointed by CADER. The arbitration was concluded and interim and final awards were granted in favour of the Applicant on 30th June, 2017. One of the orders 10 made was for valuation of the partnership business.

That in a letter dated 21st January 2021, the Applicant then wrote to the Respondents' lawyers nominating an accountant to value the partnership. This letter was never responded to. That on 24th May, 2021, the Applicant's lawyers wrote to the accountant that the arbitrator had nominated to undertake the 15 valuation exercise in the event the parties failed to agree on one, to which the accountant accepted and requested for a joint meeting in a letter dated 28th May,

2021. That the Respondents neither appeared nor did they give the accountant the required information. That the Respondents were invited for a meeting with a view of mapping a way forward but despite receipt of the said invitation they still 20 didn't show up. That the recognition of the award and issuance of a decree will enable the Applicant enforce his rights and entitlements under the award.

In opposition, the Respondents filed an affidavit in reply sworn by the 2nd Respondent wherein he stated that; the Applicant filed this application seeking for orders of the court to validate and authorize the execution of orders and

25 resolutions of an arbitrator appointed solely by Mr. Jimmy Muyanja the Executive Director of CADER. That the 2nd Respondent and others appeared at CADER with Applicant, following a dispute among them as partners in the partnership business, where the 2nd Respondent indicated that the Applicant was in a wrong

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- 5 court, a court that lacked jurisdiction in that said application. That the proceedings of Mr. Jimmy Muyanja leading to the appointment of an arbitrator were bad in law and illegal and subsequently the Respondents object to the resultant awards being sought to be validated by the Applicant. That, however, Mr. Jimmy Muyanja and the arbitrator ignored all pleas and chose to proceed - 10 with the proceedings ex-parte. That through the advice of his lawyers, Mr. Jimmy Muyanja acted illegally occupying the office of the Executive Director of CADRE and whatever actions he undertook during that period, be declared null and void.

In rejoinder, the Applicant stated that communications requesting for both parties to appoint an arbitrator, were written to the Respondents but the same

- 15 were ignored. That the only objection the Respondents raised to the application for the appointment of an arbitrator at the time was the issue of *res judicata*, to which CADER ruled that the application was not *res judicata* in the interim award. That the arbitration award was delivered in 2017 long before a decision was rendered by Court that the Executive Director had no power to appoint an - 20 arbitrator. That no objection was ever made by the Respondents against the arbitrator, to whom the Respondents subjected themselves and participated in the proceedings, and neither have they filed any objection in the specified time of 30 days against the award as mandated by law.

#### **Representation and appearance**

25 The Applicant was represented by M/s Asingwire & Partners, Advocates while the Respondents were represented by M/s Galisonga & Co. Advocates. The court issued a hearing notice on 8thNovember, 2023 inviting the parties to attend the hearing of this application on 21st March, 2024 at 9:30 am. During the hearing,

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5 counsel for the Applicant informed court that the Respondents were served and they filed their reply objecting to this cause. The Respondents did not turn up when the matter was called for hearing on 21st March, 2024. Court being satisfied that the Respondents were served, the Applicant proceeded *ex- parte*. In any event, the Respondents filed their reply and Court has proceeded to determine 10 the matter based on their affidavit evidence.

# **Issues for determination**

- 1. Whether court has power/jurisdiction to recognize and enforce the award? - 2. Whether the award is unenforceable on account of alleged illegality by the Arbitral Tribunal? - 15 3. What remedies are available to the parties?

# **Resolution**

**Issue 1: Whether court has power/jurisdiction to recognize and enforce the award**

# **Section 35 (1) & (2) of the Arbitration and Conciliation Act** states that:

- 20 *1) An arbitral award shall be recognized as binding and upon application in writing to the court shall be enforced subject to this section.* - *2) Unless the court otherwise orders, the party relying on an arbitral award or applying for its enforcement shall furnish-*

*(a) the duly authenticated original arbitral award or a duly certified copy of*

- 25 *it; and* - *(b) the original arbitration agreement or a duly certified copy of it.*

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5 According to the facts before Court, the parties agreed under **Clause 21 of the Partnership Deed** dated 28th March, 2000, that:

*"Whenever a big disagreement arises an arbitrator agreed upon by all partners at a special general meeting convened at the request of two members shall be appointed and his decision shall be final except that the* 10 *Partner dissatisfied may file a court action."*

Following the Applicant's misunderstanding with his fellow partners/Respondents, he sought to dissolve the partnership and instituted a suit vide HCCS No. 53 of 2009, which was dismissed and the dispute referred to arbitration. Subsequently, as per **annexures "B" & "C"** the dispute was referred to

15 arbitration before CADER. It was registered as CAD. ARB No. 11 of 2016 and the dispute was heard by the Arbitrator, Mr. Mohmed Mbabazi who issued both an interim and final arbitral award.

Pursuant to the requirement under **Section 35(2)(a) of the Arbitration and Conciliation Act**, the court's duty and/or jurisdiction in enforcing arbitral awards

- 20 is limited to the presence of an arbitration agreement/clause and availed certified or originals of the arbitral award on the court file as held in the case of *Alios Alliance Ltd vs. NSJ Investments Ltd & Anor HCMA No. 691 of 2021.* The Applicant has produced the arbitration agreement/clause, the interim and final arbitral awards and the same were certified by the Centre for Arbitration and - 25 Dispute Resolution (CADER), thus satisfying this requirement. Therefore, this court has jurisdiction to determine this matter.

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# 5 **Issue 2: Whether the award is unenforceable on account of alleged illegality by the appointing the Arbitral Tribunal**

The Respondents state that the proceedings leading to the appointment of the arbitrator were illegal and thus the resultant awards were void ab initio. The Applicant in response stated that the only objection the Respondents raised to

10 the application for the appointment of an arbitrator at the time was the issue of *res judicata*, to which CADER ruled that the application was not *res judicata* as seen from the Interim Award.

A perusal of the Interim Award shows that the Respondents fully participated in the proceedings with the Arbitrator, that is; filed their defence to the

15 Applicant's/Claimant's statement of claim, filed a joint scheduling memorandum and the only preliminary objections raised at that time by the Respondents were; that the Applicant's/Claimant's claim was barred by limitation and that the Claimant's claim was res judicata, both of which were overruled.

Without a doubt, the Respondents never raised an objection in regard to the 20 appointment of the arbitrator at any one time until the matter was heard and arbitral awards delivered in 2016 and 2017. According to the facts before court, the parties appeared before Hon. Lady Justice Irene K. Mulyagonja in HCCS No. 53 of 2009, who ordered them to agree and appoint an arbitrator to resolve their matter as clearly laid out under **Clause 21 of their Partnership deed**. The

25 Applicant applied for the appointment of an arbitrator by CADER and the arbitration proceedings were commenced. This averment by the Applicant has not been refuted by the Respondents. The Respondents now raise the objection as to appointment of the arbitrator who heard and determined CAD ADR No. 11

Page **6** of **11** 5 of 2016, in the Affidavit in reply which in my view is an afterthought and disingenuous of them.

The parties were supposed to agree and appoint an arbitrator as per their agreement and as ordered by the judge in HCCS No. 53 of 2009 but for unstated reasons, the Respondents did not comply with this order. The Applicant then

10 decided to write to CADER asking the Institution to appoint an arbitrator which it did and the Respondents submitted themselves to the process up until the Awards were rendered. It is now that they raise an objection to the Arbitrator's appointment at the stage of enforcing the Awards.

**Section 12(3) of the Arbitration and Conciliation Act, Cap 4** states that:

15 *"A party may challenge an arbitrator appointed by him or her or in whose appointment that party has participated, only for reasons of which he or she becomes aware after the appointment."*

## **Section 13 on Challenge Procedure of the ACA** states that:

*"(1) In this section, the parties are free to agree on a procedure for* 20 *challenging an arbitrator.*

*(2) If there is no agreement under subsection (1), a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the composition of the appointing authority or after becoming aware of any circumstances referred to in section 12(2) send a written statement of the* 25 *reasons for the challenge to the appointing authority; and unless the arbitrator who is being challenged withdraws from his or her office or the other party agrees to the challenge, the appointing authority shall decide on*

5 *the challenge within a period of thirty days from receipt of a written statement."*

The Applicant applied to CADER for the appointment of an arbitrator. The arbitrator was appointed by the Executive Director of CADER. The Respondents had fifteen (15) days from the date of appointment of the arbitrator to challenge

10 his appointment. This was neither done by the Respondents and nor is it anywhere on record that this objection was raised and it was not addressed. This objection is only belatedly coming to the fore at the point of enforcing the Awards. In the case of **TMA Architects & Anor vs. Prome Consultants Ltd HCMC No. 0080 of 2021, at page 16, paragraph 2**, the Hon. Justice Stephen Mubiru 15 stated that:

> *"A party to an arbitration proceeding can object to the jurisdiction of the tribunal on or before the submission of the statement of defence. All objections to the jurisdiction of an arbitral tribunal based on irregular appointment must be taken no later than the submission of the statement*

20 *of defence."*

The Respondents filed their statement of defence and subjected themselves to the arbitration proceedings till the end when the Arbitrator issued his Award. I find that the Respondents waived their rights under section 13 of the ACA when the failed to formally object to the appointment of the arbitrator within 15 days and when they filed their defence. The *Black's Law Dictionary, 9th* 25 *Edition at page 1717* defines waiver as:

> *"The voluntary relinquishment or abandonment express or implied of a legal right or advantage".*

5 The Respondents are therefore estopped from raising their objection to the appointment of the arbitrator at this stage of enforcing the Awards. The *Black's Law Dictionary, 9th Edition at page 629 defines estoppel as:*

*"A bar that prevents one from asserting a claim or right that contradicts what one has said or done before or what has been legally established as* 10 *true."*

The Respondents' objection is hereby overruled.

The Arbitration and Conciliation Act is very clear on why, when and how an arbitration award should be set aside. This is laid out in **section 34 of the ACA.** I find that the Respondents are indirectly asking court to set aside the Awards of the 15 Arbitrator on grounds that the appointing authority acted illegally. This objection has already been overruled. The Respondents failed to object to the appointment of the Arbitrator within time as provided for under **section 13 of the ACA.** The Respondents also failed to challenge the Awards within thirty (30) days from the time they were delivered as provided for under **section 34 (3) of the ACA.** The Interim Award was delivered on 8th 20 November, 2016 and the final award was delivered on 30th June, 2017. The Respondents are clearly time barred. The application for recognition and enforcement of both awards was filed in court on 11th April, 2023 and admitted by court on 8th November, 2023. In the case of *Great Lakes Energy Co. Ltd vs. MSS XSABO Power Ltd & 4 Ors Arbitration Causes No.*

25 *0002 and 0005 of 2023 (consolidated) at page 22***,** Hon. Justice Mubiru Stephen while relying on the case of *Roko Construction Ltd v. Mohammed Hamid C. A. Civil Appeal No.51 of 2011*, where an application made to set aside an arbitral award six months after the date the award was delivered by the arbitrator in presence of the

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5 lawyers of the parties, the court of appeal found the application incompetent and that it was time barred and a nullity in the law. The Court of Appeal held that an application to set aside an arbitral award must be made within one month from the date the award was received by the party.

This Court cannot entertain the Respondents' objections to the enforcement of

- 10 the Awards at this point and in the manner in which they have been presented. The Respondents ought to have filed an application objecting to the enforcement of the Awards within 30 days from the time they were delivered by the Arbitrator. I therefore find that the Awards are enforceable and Court should proceed to determine the enforcement of the arbitral awards. - 15 This application was also brought under **Section 36 of the Arbitration and Conciliation Act** which states that:

*"Where the time for making an application to set aside the arbitral award under Section 34 has expired, or that application having been made, it has been refused, the award shall be enforced in the same manner as if it were* 20 *a decree of the court."*

- 5 In conclusion therefore, I hold that: - 1. The Interim Award dated 8th November, 2016 is hereby recognized; - 2. The Final Arbitral Award in CAD ARB No. 11 of 2016 dated 30th June, 2017 is hereby recognized; - 3. A decree is hereby issued for the enforcement of the Interim and Final - 10 Arbitral Awards; and - 4. Costs of this application are awarded to the Applicant.

## **Signed and Dated at Kampala this 29th day of April 2024.**

**Harriet Grace MAGALA Judge Delivered online (ECCMIS) this 15th day of May 2024.**