Uganda National Roads Authority v Multiline Construction Company Limited (Miscellaneous Cause 103 of 2023) [2024] UGCommC 266 (3 September 2024)

Full Case Text

#### THE REPUBLIC OF UGANDA

### IN THE HIGH COURT OF UGANDA AT KAMPALA

### (COMMERCIAL DIVISION)

## MISCELLANEOUS CAUSE NO. 0103 OF 2023

#### (ARISING FROM ARBITRATION CLAIM NO. 01 OF 2023)

#### **UGANDA NATIONAL ROADS AUTHORITY ========APPLICANT**

#### VERSUS

### MULTILINE CONSTRUCTION COMPANY LTD====RESPONDENT

## Before Hon Lady Justice Patricia Kahigi Asiimwe

#### **Ruling**

#### Introduction

- 1. The Applicant brought this application under Section 16(6) of the Arbitration and Conciliation Act Cap 5 and Rule 13 of the Arbitration Rules, Section 98 of the Civil Procedure Act Cap 282 seeking orders that; - a) A declaration that Mr. Derrick Lufunya has no jurisdiction to determine the dispute between the parties as a sole Arbitrator - b) A declaration that the dispute should be handled by a panel of three arbitrators ordered in Misc Cause No. 62 of 2021.

- c) A declaration that Mr. Derrick Lufunya's conduct in this matter is tainted with bias and partiality. - d) A declaration that 60 days granted by Court for hearing of the arbitration be extended as they have expired. - e) Costs of the application be provided for. - 2. The grounds of the application are laid down in the Affidavit in Support deponed by Henry Muhangi, senior legal officer with the Applicant. He stated as follows: - a) That the parties entered into a periodic contract from which a construction dispute arose and the matter was referred to the adjudicator, and the Respondent being dissatisfied by the ruling of the Adjudicator referred the matter to Arbitration. - b) The Respondent also referred the matter to CADER for appointment of Arbitrator(s) but CADER failed to appoint an arbitrator and the Respondent referred the matter to Court to appoint a sole Arbitrator. - c) On $15th$ May 2023 the Court delivered a ruling on ECCMIS in which it ordered that the parties have the matter arbitrated by three arbitrators. - d) On 5th July 2023 Mr. Derrick Lufunya proceeded to issue procedural orders in total transgression of Court orders, the Applicant wrote to him expressing its objection to his jurisdiction as a sole arbitrator. - e) The Applicant made an application on 21st September 2023 challenging his jurisdiction to hear the matter solely. Mr. Derrick Lufunya made a ruling in that application in which

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he held that he had jurisdiction to hear the matter as sole arbitrator.

- $\mathbf{f}$ That the 60 days given by Court to conduct the arbitration proceeding lapsed on 15th July 2023 and the same can only be extended by Court. - The Respondent opposed this application through an Affidavit in 3. Reply deponed by Victoria Kenyonyozi. She stated as follows; - - $\overline{a}$ That the application is res judicata as the matter was heard and decided by Mr. Derrick Lufunya. - b) This application is statute barred as the Learned Arbitrator made an award in the arbitration on $23rd$ November 2023 which rendered the arbitration concluded on its merits and no action to set it aside has been preferred. - c) The Applicant put itself outside the jurisdiction of the arbitration when it failed to file its statement of defence within the timelines issued. - d) The Applicant lacks *locus* standi to challenge the appointment of the court appointed and distinguished arbitrator. - e) The affidavit sworn by Mr. Henry Muhangi ought to be struck off the record because he lacks the requisite authorization to depone the Affidavit on behalf of the Applicant. - That the ruling of the Honorable Court on paragraph 7 is in $f$ line with arbitration agreement which provides for a single sole arbitrator and it appointed Mr. Derrick Lufunya.

$\overline{A}$

- That the applicant lacked any authority to nominate any $g)$ other arbitrator contrary to the dictates of the arbitration agreement. - The discretion to extend time within the arbitration law $h$ agreed upon as the guiding law for the arbitration is a preserve of the Arbitrator and no court can thereby oust the said discretion as provided.

#### Representation

The Applicant was represented by the Directorate of Legal Services 4. Uganda National Roads Authority and the Respondent was represented by Paul Byrahunga Advocates. At the hearing, both parties made oral submissions.

#### Resolution:

- The main issue for resolution is whether the Learned Arbitrator had 5. jurisdiction to hear the Application. However, the Respondent raised preliminary issues which I will address before resolving the substantive issue. - The Respondent raised a preliminary issue that the affidavit sworn 6. by Mr. Henry Muhangi ought to be struck off the record because he lacks the authority to depone the Affidavit on behalf of the Applicant. - The deponent stated in his affidavit in reply that he is a senior legal 7. officer in the Respondent and swore the affidavit in that capacity. An affidavit should be sworn by someone who has knowledge of the facts of the case (see Order 19 Rule 3 (1) of the Civil Procedure Rules). In this case, this was a legal matter, and an officer in the legal department is best placed to swear the affidavit. The fact that the deponent is an employee of the Respondent is evidence enough

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that he is authorised to swear the affidavit on behalf of the Respondent unless evidence is adduced to the contrary. The preliminary objection is overruled.

- Counsel submitted that this court does not have jurisdiction over 8. the matter because there is already an award and the Applicant did not file an application to set aside the award. - 9. On 30th June 2023, the arbitrator, Derrick Lufunya wrote to the Applicant and informed them that he was appointed an arbitrator in the matter and that court had directed that the arbitration be completed in 60 days and that 30 days had elapsed without enforcing the court's directives. He advised that he was going to sit as a single arbitrator in accordance with section $10(2)$ of the Arbitration Act. He invited them for a preliminary hearing on 5th July 2023. - 10. On 5th July 2023, the Applicant informed the Arbitrator that they were not aware of the Court's decision and that they only learned of the Ruling through his letter. The Applicant then nominated Eng. Henry Alinaitwe as their arbitrator. This letter was copied to the Respondent's lawyers. - 11. In a letter dated 10th July 2023, the Respondent's lawyers wrote to the Applicant informing them that they failed to nominate an arbitrator and that therefore Mr. Derrick Lufunya is a sole arbitrator. - 12. The Applicant in response informed the Respondent that they had noted with concern their insistence that the matter be heard by their nominee as a sole arbitrator. They also stated in the letter that at the preliminary hearing they informed the arbitrator that they had not been in a position to nominate an arbitrator within the 2 weeks given by court because they were not aware of the Ruling. They informed him that they were willing to nominate an arbitrator

and proceed with the matter. The arbitrator informed them that the two weeks within which court directed the Applicant to nominate an arbitrator had lapsed and therefore the Applicant had lost the right to nominate an arbitrator. The Applicant then raised the concern that despite arguing that the two weeks granted by court to appoint an arbitrator had lapsed and could not be extended, the arbitrator extended the time set by court to deliver the award.

- 13. On 12th September 2023, the Applicant filed an application challenging the Arbitrator's jurisdiction which he dismissed on 21st September 2023. - 14. The background to the present application is that on the 15th Day of May 2023, this court delivered its ruling following an application for court to appoint an arbitrator to handle the dispute in issue. Court allowed the Application ordered as follows: - 1. That the Respondent appoints an arbitrator within 2 weeks *from the date of this Ruling;* - *2. That the arbitrator appointed under 1) above should together* with Mr. Derrick Lufunya appoint a 3rd Arbitrator. - 3. The Arbitrators should make their decision within 60 days from the date of this ruling. - 15. I note that the Arbitrator in his wisdom determined that the Applicant did not comply with the court order regarding the time within which to appoint an arbitrator but went ahead to handle the matter as a sole arbitrator. This was in disobedience of the court order. - 16. In the case of **Housing Finance Bank Ltd V Edward Musisi Misc Application No. 158 of 2020** the Court of Appeal held that:

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A party who knows of an order, regardless of whether, in the view of that party, the order is null or valid, regular or irregular, cannot be permitted to disobey it by reason of what that party regards the order to be. It is not for that party to choose whether or not to comply with such an order. The order must be complied with in totality, in all circumstances by the party concerned subject to that party's right to challenge the order in issue. This may be by way of Revision, Review or by Appeal. See CHUK CREMET (1 Corp Jemp 342). We hasten to add that it is the responsibility of and duty of the party concerned, in case that party for some genuine reason, finds compliance with the court order not possible, to appropriately move court issuing the order and bring to the attention of the court the reasons for not compliance.

This is to ensure that the court issuing the order not only must not be held in contempt, but must not, whatever the circumstances, appear to be held in contempt by any litigant. Otherwise to disobey an order of court, at any party's or whims, on the basis that such an order is null or irregular, or is not acceptable or is not pleasant to the party concerned is to commit contempt of Court. A court of law never acts in vain and, as such, issues touching on contempt of court take precedence over any other case of invocation of the jurisdiction of the court.

17. The arbitrator was well aware of the court order but chose to comply with it partially to the extent that it directed on the time within which the Applicant was required to nominate an arbitrator. The arbitrator chose to ignore the main purpose of the order which was to ensure that allegations of partiality do not arise by directing that the matter is handled by panel of three arbitrators. The arbitrator therefore acted in contempt of the court order. Consequently, his actions are illegal. As was held in the case of **Makula International** Ltd V. His Eminence Cardinal Nsubuga & Anor [1982] HCB 11, a court of law cannot sanction what is illegal once it has been brought to the court's attention.

- 18. The arbitrator had no jurisdiction to handle the matter, consequently the award cannot be endorsed by Court. In conclusion, therefore, the Application is allowed it is ordered as follows: - a) The award by Eng. Derrick Lufunya dated 17th November 2023 is hereby set aside. - b) That the Respondent appoints an arbitrator within 2 weeks from the date of this Ruling; - c) That the arbitrator appointed under b) above should together with Eng. Henry Alinaitwe appoint a 3rd Arbitrator within two weeks from the date of appointment of the arbitrator under b) above: - d) The Arbitrators should make their decision within 90 days from the date of constitution of the panel; and - e) The Respondent shall pay the costs of the Applicant.

# Dated this 3rd day of September 2024

RALA Patricia Kahigi Asiimwe Judge **Delivered on ECCMIS**