Wakilii

Afri-Power Engineering Company Limited v Roko Construction Limited (Civil Suit 216 of 2022)

High Court · [2024] UGCOMMC 169 · 2024 Preliminary Objection Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Ruling on defendant's preliminary objection seeking stay of proceedings and referral to arbitration under the Arbitration and Conciliation Act
Decision
Preliminary objection dismissed; matter to proceed to trial before the Commercial Division

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that the arbitration clause incorporated into the sub-contract was vague and incapable of being performed, as the wording created confusion as to which provision applied and what dispute resolution mechanism the parties had agreed to. Although the sub-contract incorporated provisions of the main contract, the specific arbitration clause reference was ambiguous and could not be given certain construction. Accordingly, the court declined to stay proceedings or refer the matter to arbitration, finding the suit competent before the court.

Outcome

Preliminary objection dismissed; matter to proceed to trial before the Commercial Division

Facts

The plaintiff, a sub-contractor, provided electrical installation works at Cairo International Bank Lotis Towers branch under a sub-contract with the defendant. The plaintiff claimed USD 73,532 for works completed, including additional works, which had been certified but remained unpaid despite demand. The defendant raised a preliminary objection seeking to stay the suit and refer the dispute to arbitration, arguing that the sub-contract incorporated the main contract's dispute resolution provisions. The sub-contract clause stated that in the event of any dispute, "Clause 18 inclusive of the main contract shall apply." The parties disputed whether this constituted a valid arbitration agreement binding the plaintiff and whether the plaintiff, not being party to the main contract, was bound by its arbitration provisions.

Issues

  1. Whether there exists a valid and enforceable arbitration agreement binding the parties.
  2. Whether the dispute between the parties is arbitrable under Ugandan law.
  3. Whether the dispute falls within the scope of the arbitration clause incorporated from the main contract.
  4. Whether the arbitration clause is vague and incapable of being performed.
  5. Whether the plaintiff, as a sub-contractor, is bound by the arbitration clause contained in the main contract between the defendant and a third party.

Orders

  • The preliminary objection is overruled.
  • The plaintiff is directed to take the necessary measures to fix the matter for trial.
  • Costs will be in cause.

Rules and key headnotes

Arbitration & ADR — Stay of Proceedings — Conditions under Arbitration and Conciliation Act s.5(1)
Under section 5(1) of the Arbitration and Conciliation Act, for a court to refer a matter to arbitration, it must be demonstrated that there is a dispute, the dispute is arbitrable, the dispute is governed by a valid and enforceable arbitration agreement, and the dispute is within the scope of the arbitration agreement.
Arbitration & ADR — Arbitrability — General Presumption in Favour of Arbitration
There is a general presumption in favour of arbitrability, and unless there is a clear bar against a dispute being amenable to arbitration, arbitration should be enforced. Generally, all disputes capable of settlement by ordinary court proceedings are arbitrable, save for matters where public policy does not allow arbitration, such as disputes arising from legislation protecting the public from harm.
Arbitration & ADR — Arbitration Agreement — Separability Principle
An arbitration clause constitutes a separate and distinct contract from the underlying contract to which it relates. This principle of separability enables the arbitration clause to be effective even if the underlying contract is void or voidable, subject to applicable limitations.
Contract Law — Sub-Contracts — Incorporation of Main Contract Provisions
As a general rule, the existence of an arbitration clause in a main contract does not mean that parties to a sub-contract are bound to proceed by arbitration. The incorporation of a main agreement into a sub-contract does not mean the incorporation of the arbitration clause provided in the main agreement unless the same is clearly and specifically provided for.
Arbitration & ADR — Vague Arbitration Clauses — Incapability of Performance
A vague arbitration clause is considered incapable of being performed since it is not capable of certain construction and the parties cannot therefore act on it. An arbitration agreement that creates confusion as to its meaning and the mode of dispute resolution agreed by the parties, such that it is hard to make out a sensible interpretation, is vague and incapable of being performed.

Legislation cited (3)

Cases cited (26)

  • Koboko Local Government v Okujjo Swali (HCMA No. 1 of 2016)
  • Owners of Motor Vessel Lillian 's' v Caltex Oil Kenya Limited [1989] KLR 1
  • NBL v Lugogo Events and Entertainment Limited (HCMA No. 1497 of 2022)
  • Pastoli v Kabale District Local Government Council and others [2008] 2 EA 300
  • Kasibante Moses v Katongole Singh Marwaha and another (HCEP No. 23 of 2011)
  • ATC Uganda Limited v Smile Communications Uganda Limited (HCMA No. 621 of 2023)
  • British American Tobacco v Lira Tobacco Stores (HCMA No. 924 of 2013)
  • Newplan Limited v Mercentile Properties Limited (HCMA No. 234 of 2022)
  • Nedmar Technology BV Ltd v The Kenyan Anti-Corruption Commission & Anor HCP 360/2006
  • Midland Finance & Securities Globetel Inc v Attorney General & another [2008] eKLR
  • Kenya Ports Authority v Base Titanium Limited [2022] KEHC 265
  • United Steel Workers of America v Warrior & Gulf Navigation Company 363 US 574 (1960)
  • Moses H. Cone Memorial Hospital v Mercury Construction Corporation 460 US 1 (1983)
  • Harbour Assurance Co. Ltd. V. Kansa General International Insurance Co. Ltd., [1992] 1 Lloyd's L.Rep. 81
  • Republic of Serbia v. Imagesat International NV [2009] EWHC 2853 (Comm)
  • DHL Project v Gemini Ocean Shipping (The Newcastle Express) [2022] EWCA Civ 1555
  • Heyman v. Darwins, Ltd [1942] App. Cas. 356 (HL)
  • TMA Architects & Anor v Prome Consultants Limited (HCMC No. 80 of 2021)
  • Interserve Industrial Services Ltd v ZRE Katowice SA, [2012] EWHC 3205 (TCC)
  • Provincial Construction Company & another v Attorney General [1991] KLR
  • MR Engineers & Contractors Pvt. Ltd. v. Som Datt Builders Pvt. Ltd., 2009 7 SCC 696
  • Barrier Limited v Redhall Marine Limited [2016] EWHC 381 (QB)
  • Aya Investments (U) Ltd v Mugoya Construction & Engineering (U) Ltd (HCMA No. 1 of 2008)
  • Lucky-Goldstar International (HK) Ltd v. NG Moo Kee Engineering Ltd [1993] HKCFI 14
  • Bulkbuild Pty Ltd v. Fortuna Well Pty Ltd & Ors [2019] QSC 173
  • AC Yafeng v Living World Assembly (HCMA No. 739 of 2021)

Full judgment

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Afri-Power Engineering Company Limited v Roko Construction Limited (Civil Suit 216 of 2022) [2024] UGCommC 169 (14 February 2024)
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.