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Oil Seeds (U) Ltd v Uganda Development Bank

Supreme Court · [2010] UGSC 23 · 2010 Appeal Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Second appeal to the Supreme Court from the Court of Appeal's dismissal of an appeal concerning enforcement of an arbitral award
Decision
Appeal dismissed; arbitral award held unenforceable by reason of the parties' settlement

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Holding

The Supreme Court considered whether an arbitral award of UGX 2,882,400,000 in the appellant's favour remained enforceable as a decree after the parties voluntarily entered a Deed of Settlement. The Court held that the Settlement, which the Registrar merely endorsed, resolved the parties' entire dispute — including the respondent's objection to that award — and that the appellant, having received UGX 870,000,000 under it, was estopped from later seeking execution of the award. The award thereby became unenforceable; an application to enforce could not be made until objections had been disposed of; and the appellant's prayer for interest could not stand. The appeal was dismissed with costs.

Facts

In 1988 the appellant entered a loan agreement with the respondent bank to finance an oil extraction and milling plant. Disputes arose and the respondent recalled the loan in 1992. Pursuant to the loan agreement's arbitration clause, an arbitrator (Mr. Mulenga) made an award, and on remission a second arbitrator (Mr. Kasule) in 1999 awarded the appellant UGX 2,882,400,000 for loss of profits while declining its claim of UGX 1,023,644,800. The appellant objected to part of the second award seeking remission; the respondent cross-objected to the whole award. Before the High Court disposed of the application, the parties, both legally represented, voluntarily entered a Deed of Settlement on 25 July 2000, sealed by the Registrar, under which the respondent paid the appellant and its lawyers a total of UGX 870,000,000. The respondent paid and the appellant acknowledged receipt. About a year later the appellant applied for a declaration that the UGX 2,882,400,000 award had never been set aside and should be executed as a decree.

Issues

  1. Whether the arbitral award of UGX 2,882,400,000 in the appellant's favour was rendered unenforceable by the Deed of Settlement endorsed by the Registrar.
  2. Whether the Settlement related to the entire dispute, including the arbitral award, or only to the appellant's claim of UGX 1,023,644,800.
  3. Whether the arbitral award ought to be executed as a decree of the High Court, with interest.

Orders

  • Appeal dismissed.
  • Costs to the respondent in this Court and in the courts below.

Key headnotes

Arbitration — Settlement of objections — Effect on enforceability of award
Where parties to arbitration proceedings voluntarily settle their objections and cross-objections to an award by a deed of settlement, the underlying award ceases to be enforceable as a decree of court.
Civil Procedure — Powers of the Registrar — Endorsement of a settlement
A Registrar has power to seal or endorse a settlement reached by parties in a pending application before the High Court, and such endorsement does not vitiate the settlement nor amount to an unauthorised entry of judgment.
Contract Law — Construction of settlement agreements — Natural meaning of clear words
The clear words of a settlement agreement must be given their natural meaning, and a party who was legally represented when concluding it cannot rely on the contra proferentem rule to read down a settlement it failed to amend before signing.
Arbitration — Enforcement of award — Pending objections under the Arbitration Rules
Under rule 14 of the Arbitration Rules, an application to enforce an arbitral award as a decree of court cannot be made until any objections to the award have been disposed of by the court.
Arbitration — Finality of award — Court's discretionary jurisdiction to remit or set aside
An arbitral award filed in court is not final and conclusive; under the repealed Arbitration Act the court retains a discretionary jurisdiction to remit the award for reconsideration or to set it aside.
Estoppel — Acceptance of benefit under a settlement
A party who has received and accepted the benefit of a settlement is estopped from subsequently contending that the award which that settlement resolved still stands and remains executable.

Legislation cited (19)

  • Civil Procedure Act Cap. 65 s.35
  • Civil Procedure Act Cap. 65 s.101
  • Civil Procedure Act Cap. 71 s.34
  • Civil Procedure Act Cap. 71 s.98
  • Judicature Statute 1996 s.35
  • Judicature Act Cap. 13 s.33
  • Judicature Act Cap. 13 s.14
  • Arbitration Act Cap. 55 s.9(2)
  • Arbitration Act Cap. 55 s.11
  • Arbitration Act Cap. 55 s.12
  • Arbitration Act Cap. 55 s.13
  • Arbitration Rules r.7
  • Arbitration Rules r.8
  • Arbitration Rules r.14
  • Constitution of Uganda art.139(1)
  • Constitution of Uganda art.126
  • Civil Procedure Rules O.46 r.2
  • Civil Procedure Rules O.46 r.3
  • Civil Procedure Rules O.46 r.4

Cases cited (3)

  • Gokaldas Laximidas Tanna v Sr. Rosemary Muyinza and Another (Civil Appeal No. 12 of 1992)
  • Christopher Sebuliba v Attorney General (Civil Appeal No. 38 of 1995)
  • Oil Seeds (Uganda) Ltd v Uganda Development Bank (Civil Appeal No. 23 of 1995)
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.