Fulgensius Mungereza v Africa Central [2004] UGSC 9

Supreme Court · 2004 Appeal Dismissed ✦ AI-generated summary ↓ Download

Jurisdiction

Uganda

Case Type

Second appeal to the Supreme Court from a Court of Appeal decision upholding the High Court (Commercial Division) order staying the appellant's suit and referring the dispute to arbitration.

Decision

Appeal dismissed; the stay of the civil suit and referral of the dispute to arbitration upheld

The full judgment

Read the complete, verbatim text of this judgment.

Cited — treatment unverified cited in 1 (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 considered whether a party's poverty rendered an arbitration agreement 'incapable of being performed' under section 41 of the Arbitration and Conciliation Act 2000. It held that impecuniosity does not per se bring an agreement within that exception, which applies only where performance is objectively impossible even if both parties are ready, willing and able. A party's poverty justifies refusing a stay only where it was caused by the other party's breach, and there must be sufficient evidence of such causation; the appellant failed to prove the respondent caused his poverty. The Court further held that a dispute about non-observance of the mediation pre-condition itself fell within the arbitration clause. Appeal dismissed with costs.

Facts

The appellant, a certified public accountant, became a partner in Coopers and Lybrand (Uganda) in 1986. In 1996, partners across Africa Central (Kenya, Tanzania, Uganda, Zambia, Mauritius and Ghana) agreed to form a single regional entity. Following the 1997–1998 global merger of Coopers and Lybrand with PricewaterhouseCoopers, the Uganda chapter was registered as PricewaterhouseCoopers with the appellant as a partner. Members signed a Framework Agreement containing a mediation-then-arbitration clause (Clause 29), with arbitration to take place in London. In April 2000, the Chief Executive Officer of PricewaterhouseCoopers Africa Central informed the appellant that the Uganda partners had lost confidence in him; he eventually left the firm. He sued PricewaterhouseCoopers Africa Central claiming US$6,200 leave passage, US$106,000 as a refund on his tax account, and general damages for breach of contract. The respondent applied under sections 40 and 41 of the Arbitration and Conciliation Act to stay the suit and refer the dispute to London arbitration. The appellant resisted, contending he was too poor to afford arbitration in London. The trial judge granted the stay and the Court of Appeal dismissed his appeal.

Issues

Whether the appellant's poverty or impecuniosity rendered the arbitration agreement 'incapable of being performed' within the exception in section 41 of the Arbitration and Conciliation Act 2000.
Whether the failure to first refer the dispute to mediation under Clause 29.1 of the Framework Agreement rendered the arbitration agreement inoperative.
Whether the Court of Appeal erred in declining to consider grounds 2 and 3 of the memorandum of appeal.

Orders

Appeal dismissed.
Costs awarded to the respondent in the Supreme Court and in the courts below.

Key headnotes

Arbitration — Stay of proceedings — 'Incapable of being performed' exception

An arbitration agreement is 'incapable of being performed' under section 41 of the Arbitration and Conciliation Act only where the circumstances are such that it could no longer be performed even if both parties were ready, willing and able to perform it; a party's poverty or impecuniosity does not per se bring an agreement within that exception.

Arbitration — Stay of proceedings — Impecuniosity — Causation by opposing party's breach

A party's poverty will justify a court in refusing to stay proceedings in favour of arbitration only where that poverty was caused by the other party's breach of contract, and the party must adduce sufficient evidence establishing that causation; an inability to satisfy or fund the arbitration does not by itself render the agreement incapable of being performed.

Arbitration — Mediation pre-condition — Scope of arbitration clause

Where a Framework Agreement provides for mediation before arbitration, a dispute as to whether a party breached the agreement by failing to first submit the matter to mediation is itself a dispute arising under the agreement and must be resolved by arbitration in the agreed forum.

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 QB 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 Notermann 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.