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Adler Construction Company Ltd v The Zenitaka Corporation and Another (Miscellaneous Cause No. 91 of 2025)

High Court · [2025] UGCOMMC 362 · 2025 Application Dismissed (Partly Allowed) AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for interim measures of protection pending arbitration proceedings under Section 6 of the Arbitration and Conciliation Act
Decision
Application dismissed save for restraint on cashing the conditional Performance Bond pending arbitration

Observed later treatment

Cited — treatment unverified cited in 1 (treatment unverified) Sequitur — Uganda’s citator · Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

No adverse treatment recorded Cited 1 time with no adverse treatment recorded; not yet tested on the merits. Derived from citing cases in the Wakilii corpus — a deterministic signal, not legal advice.

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 court dismissed the application for interim measures restraining the call on an unconditional Advance Payment Bond, holding that the applicant contractor had not shown special circumstances to justify restraining the bond call where it acknowledged delays and breaches. The court held that by providing an on-demand guarantee, the contractor agreed to bear the financial risk of disputes until resolution. However, the court restrained the call on the conditional Performance Bond pending arbitration.

Outcome

Application dismissed save for restraint on cashing the conditional Performance Bond pending arbitration

Facts

On 26 November 2024, the applicant contractor entered a subcontract with the 1st respondent to carry out irrigation system works in Bulambuli District, to be completed by 31 August 2025. The applicant procured an Advance Payment Bond of UGX 726,000,000 and a Performance Bond of UGX 242,000,000 from the 2nd respondent in favour of the 1st respondent. The applicant was paid UGX 726,000,000 as advance payment, to be recovered from payment certificates for work done. By 15 August 2025, 15 days before the completion date, the applicant had completed only 62.8% of the works and the 1st respondent had not recovered UGX 438,036,529 of the advance. The 1st respondent issued notices of delayed progress and breach, then demanded payment on both bonds. The applicant acknowledged delays but attributed them to the 1st respondent's breaches and adverse weather. The applicant commenced arbitration proceedings and sought interim measures restraining the bond calls.

Issues

  1. Whether the application discloses sufficient grounds for the grant of the interim measures of protection?
  2. What remedies are available to the parties?

Orders

  • Application dismissed.
  • Performance Bond No. P/210/7001/2025/000017 shall not be cashed until the determination of the arbitration.
  • Costs of this application shall abide the outcome of the arbitration proceedings.

Rules and key headnotes

Interim Measures of Protection — Restraining Call on Unconditional On-Demand Guarantees
A court will typically refuse an injunction to restrain a call on an unconditional on-demand performance guarantee unless there are special circumstances, because by agreeing to provide such a guarantee, the contractor has agreed to allocate the financial risk of any dispute to itself until the dispute is finally resolved.
Performance Guarantees — Unconditional Bonds — Exceptions to Enforcement
An unconditional bond or on-demand guarantee can be called upon by the beneficiary upon written demand without regard to the underlying construction contract, subject only to the exceptions of fraud, unconscionability, and express terms to the contrary.
Performance Guarantees — Bona Fide Breach — Call on Unconditional Guarantee
A call on an unconditional performance guarantee is premised upon documents stating a bona fide claim of breach of contract. Where a contractor acknowledges having occasioned delays in breach of the subcontract and the beneficiary has issued notices of breach and delayed progress, the call on the guarantee is not in bad faith.
Interim Measures — Balance of Convenience — Public Interest Projects
In determining whether to grant an interim injunction restraining enforcement of a performance guarantee in a dispute concerning a government infrastructure project of significant public importance affecting food security and public welfare, the balance of convenience favours the employer where the contractor has not shown special circumstances and the injunction would defeat the purpose of the security as a risk allocation device.
Interim Measures — Conditional Performance Bonds — Restraint Pending Arbitration
Where a performance bond is conditional and requires arbitral determination of breach, the court will restrain the call on that bond until the determination of the arbitration proceedings.
Affidavits — Affidavit in Rejoinder — Not Mandatory
An affidavit in rejoinder or any other additional affidavit, rather than an affidavit in support of an application, is additional evidence that is only filed if deemed necessary. A party's failure to file an affidavit in rejoinder does not disadvantage its application and the application cannot be dismissed on that basis.

Legislation cited (8)

Cases cited (18)

  • Oriental Insurance Brokers Limited v Transocean (U) Limited (Supreme Court Civil Appeal No. 55 of 1995)
  • Uganda Telecom Limited v ZTE Corporation (Supreme Court Civil Appeal No. 03 of 2017)
  • Walugembe William v Katumwa Ronald and Another (High Court Miscellaneous Application No. 536 of 2025)
  • Kasaala Growers Co-operative Society v Kakooza Jonathan and Another (Supreme Court Civil Appeal No. 19 of 2010)
  • Banco Arabe Espanol v Bank of Uganda (Supreme Court Civil Appeal No. 8 of 1998)
  • Water & Environment Media Network (U) Ltd and 2 Others v National Environmental Management Authority and Another (Consolidated Miscellaneous Cause Nos. 239 & 255 of 2020)
  • E.L.T Kiyimba Kaggwa v Hajji Abdul Nasser Katende (Civil Suit No. 2109 of 1984)
  • Imelda Getrude Basudde Nalongo v Tereza Mwewulize and Another (High Court Miscellaneous Application No. 402 of 2003)
  • Gapco (U) Ltd v Kaweesa Badru and Another (High Court Miscellaneous Application No. 259 of 2013)
  • AC Yafeng Construction Limited v The Registered Trustees of Living Word Assembly Church and United Bank of Africa (High Court Miscellaneous Application No. 01 of 2021)
  • Uganda National Bureau of Standards v REN Publishers Limited and Another (High Court Miscellaneous Application No. 635 of 2019)
  • Roko Construction Ltd v Pearl Engineering Co. Ltd (High Court Miscellaneous Cause No. 09 of 2021)
  • Great Lakes Energy Company NV v MSS Xsabo Power Limited and 4 Others (High Court Miscellaneous Application No. 1041 of 2023)
  • Polat Yol Yapi Sanvetic SA v Uganda National Roads Authority (High Court Miscellaneous Cause No. 03 of 2022)
  • Great Lakes Petroleum (U) Limited v Vivo Energy Uganda Limited (High Court Miscellaneous Cause No. 133 of 2023)
  • Rohi Services Limited v Board of Governors Tororo Girls' School (High Court Miscellaneous Cause No. 16 of 2025)
  • Proline Soccer Academy v Commissioner Land Registration (High Court Miscellaneous Application No. 494 of 2018)
  • Roko Construction Limited v Pearl Jubilee Estates Limited and Another (High Court Miscellaneous Cause No. 83 of 2021)

Cases citing this judgment (1)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

Full judgment

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Adler Construction Company Ltd v The Zenitaka Corporation and Another (Miscellaneous Cause No. 91 of 2025) [2025] UGCommC 362 (10 October 2025)
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.