Wakilii

Fulgensius Mungereza v PricewaterhouseCoopers Africa Central (Civil Appeal No.18 of 2002)

Supreme Court · [2004] UGSC 57 · 2004 Appeal Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Second appeal to the Supreme Court from the Court of Appeal, which had upheld the High Court (Commercial Division) order staying the appellant's suit and referring the dispute to arbitration
Decision
Appeal dismissed; the High Court order staying the suit and referring the dispute to arbitration was upheld

The full judgment

Read the complete, verbatim text of this judgment.

Sign in to read the full judgment
Cited — treatment unverified cited in 5 (treatment unverified) Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions — always read the source judgment before relying on it.

Holding

The Supreme Court dismissed the appeal, affirming the stay of the suit and referral of the dispute to arbitration. It held that a party's poverty or impecuniosity does not per se render an arbitration agreement 'incapable of being performed' under section 41 of the Arbitration and Conciliation Act; the court may only refuse a stay where the impecuniosity was shown to have been caused by the other party's breach, which the appellant failed to establish. An agreement is incapable of being performed only where it could not be performed even if both parties were ready, willing and able. Disputes over whether the mediation stipulation was breached fell to be resolved by arbitration, and the Court of Appeal was right not to consider the remaining grounds.

Facts

The appellant, a certified public accountant, became a partner in Coopers and Lybrand in 1986, and following regional and global mergers became a partner in PricewaterhouseCoopers (Uganda). The members in the Central Region signed a Framework Agreement governing the conduct of business, under which the appellant's firm was associated within PricewaterhouseCoopers Africa Central, though members remained partners in their respective countries. In April 2000 the appellant was told the Uganda partners had lost confidence in him, and he eventually left. He sued PricewaterhouseCoopers Africa Central claiming leave passages, a refund of his tax account balance and general damages for breach of contract. The respondent denied that it was a registered partnership carrying on business in Uganda, and applied under sections 40 and 41 of the Arbitration and Conciliation Act to stay the suit and refer the dispute to arbitration under Clause 29 of the Framework Agreement, which provided for mediation and then arbitration in London. The appellant resisted, contending that his poverty, allegedly caused by the respondent's breach, made the agreement incapable of being performed.

Issues

  1. Whether the appellant's poverty or impecuniosity rendered the arbitration agreement 'incapable of being performed' so as to fall within the exception in section 41 of the Arbitration and Conciliation Act and justify the court refusing to order a stay of proceedings.
  2. Whether the failure to observe the mediation stipulation in Clause 29.1 of the Framework Agreement rendered the arbitration agreement inoperative.
  3. Whether the Court of Appeal erred in failing to consider grounds 2 and 3 of the memorandum of appeal.

Orders

  • Appeal dismissed.
  • Costs of the appeal, and in the courts below, awarded to the respondent.

Key headnotes

Arbitration — Stay of Proceedings — Poverty or Impecuniosity as an Exception
A party's poverty or impecuniosity does not of itself render an arbitration agreement incapable of being performed within section 41 of the Arbitration and Conciliation Act; a court may only refuse to stay proceedings on that ground where the party establishes that the impecuniosity was caused by the other party's breach of the agreement.
Arbitration — Meaning of 'Incapable of Being Performed' — Section 41
An arbitration agreement is incapable of being performed only where, even if both parties were ready, willing and able to perform it, it could no longer be performed, such as where the named arbitrator is unable or refuses to act; a party's inability to fund the cost of the arbitration does not make the agreement incapable of being performed.
Arbitration — Mediation Clause — Disputes Referable to Arbitration
Where a Framework Agreement connects mediation and arbitration as successive procedures, the question whether a party breached the stipulation to refer a dispute first to mediation is itself a dispute arising under the agreement and is to be resolved by arbitration.
Appeals — Grounds Concerning Arbitrable Disputes — Court Declining to Consider
Where grounds of appeal raise matters that themselves constitute disputes arising under an arbitration agreement, an appellate court does not err in declining to determine those grounds, as they fall to be resolved by the arbitral tribunal of the parties' choice.

Legislation cited (2)

  • Arbitration and Conciliation Act 2000 s.40
  • Arbitration and Conciliation Act 2000 s.41

Cases cited (6)

  • Fakes v Taylor Woodrow Construction Ltd (1973) 1 All E.R. 670
  • Smith v Pearl Assurance Co. Ltd (1939) 1 All E.R. 95
  • The Rena K (1979) 1 Q.B. 377
  • Home Overseas Insurance Co. (UK) Ltd (1989) 3 All E.R. 74
  • Shell (U) Ltd v Agip (U) Ltd (Civil Appeal No. 49 of 1995)
  • Paczy v Haendler and Natermann GmbH (1981) 1 Lloyd's Rep. 302 (CA)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.