Wakilii

Ajanta Pharma Ltd v Attorney General & Anor (Arbitration Cause No. 11 of 2011)

High Court · [2012] UGCOMMC 90 · 2012 Application Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to set aside arbitrator's order made under section 32 of the Arbitration and Conciliation Act following termination of arbitral proceedings
Decision
Application partly granted — arbitrator's order on fees set aside; refund of deposit ordered; arbitrator directed to submit bill for taxation; application for directions to CADER declined

Observed later treatment

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Holding

The court held that an arbitrator's order terminating arbitral proceedings under section 32 of the Arbitration and Conciliation Act is not an arbitral award and cannot be challenged under section 34. However, where the Act provides no remedy, the court may exercise inherent jurisdiction under sections 33 and 39(2) of the Judicature Act and section 98 of the Civil Procedure Act to ensure justice is done. The court further held that an agreement on arbitrator's fees signed by a government officer without the approval of the Accounting Officer was vitiated by common mistake and therefore not binding. The arbitrator's order retaining the USD 38,500 deposit as a non-refundable commitment fee was set aside, and the arbitrator was directed to refund the deposit and submit an itemised bill for taxation.

Outcome

Application partly granted — arbitrator's order on fees set aside; refund of deposit ordered; arbitrator directed to submit bill for taxation; application for directions to CADER declined

Facts

Ajanta Pharma Limited entered into a contract with the Government of Uganda for the supply of malarial drugs valued at USD 17,952,305. After partial delivery under a first letter of credit, the Government refused to open a second letter of credit, citing a change in policy. The applicant commenced arbitration proceedings under CADER, and Mr. James Nangwala was appointed as sole arbitrator. At a preliminary hearing, the parties and arbitrator signed an agreement on fees: a block sum of USD 75,000 plus USD 2,000 administration expenses, payable in two equal instalments. The applicant paid the first instalment of USD 38,500. The Solicitor General subsequently wrote to CADER protesting the fees as exorbitant and alleging that the officer from the Attorney General's chambers who had agreed to the fees lacked proper authority under public finance procedures and that payment would attract an audit query. The parties then entered into a consent agreement to terminate the appointment of Mr. Nangwala and appoint a different arbitrator. The arbitrator issued an order terminating the proceedings under section 32(2)(c) of the Act, directing the Attorney General to refund 50% of the commitment fee to the applicant. The applicant applied to the High Court to set aside the arbitrator's order and to recover the full deposit.

Issues

  1. Whether the order terminating the arbitral proceedings by the arbitrator was an arbitral award within the meaning of the Arbitration and Conciliation Act.
  2. Whether the court has jurisdiction to entertain an application to set aside an order of termination made under section 32 of the Arbitration and Conciliation Act, given that section 34 provides only for setting aside arbitral awards.
  3. Whether the arbitrator was entitled to retain the USD 38,500 deposit paid by the applicant as arbitrator's fees for work done up to the termination of his mandate.
  4. Whether the agreement on arbitrator's fees signed on behalf of the Attorney General was binding when the officer who signed it lacked proper authority under public finance law.

Orders

  • The order of the arbitrator regarding the 50% deposit of USD 38,500 is set aside.
  • The 2nd respondent (arbitrator) is ordered to refund USD 38,500 to the applicant.
  • The 2nd respondent is directed to submit his itemised bill of arbitrator's fees and administration expenses for the actual work done up to the time of termination of the arbitral proceedings for taxation against both parties.
  • The prayer for directions to CADER to lawfully exercise its statutory mandate is declined.
  • Each party shall bear its own costs.

Rules and key headnotes

Arbitration — Arbitral Awards — Definition — Distinction between Arbitral Award and Order Terminating Proceedings
An order terminating arbitral proceedings made under section 32 of the Arbitration and Conciliation Act is not an arbitral award within the meaning of section 2(1)(b) and section 31 of the Act. An arbitral award requires adjudication of the substantive dispute, whereas an order under section 32 terminates proceedings before the dispute is heard.
Arbitration — Judicial Supervision — Challenge to Non-Award Orders — Exercise of Inherent Jurisdiction
Where the Arbitration and Conciliation Act does not provide a procedure for challenging an order of an arbitral tribunal that is not an award, the High Court may exercise its inherent jurisdiction under sections 33 and 39(2) of the Judicature Act and section 98 of the Civil Procedure Act to consider the application on its merits in order to avoid shutting the doors to justice.
Contract Formation — Common Mistake — Authority of Agent — Government Contracts
Where an agreement is entered into by a government officer who lacks the authority required under the Public Finance and Accountability Act to commit the government to expenditure requiring approval of the Accounting Officer, and this lack of authority becomes known to all parties after signature, the agreement is vitiated by common mistake and is not binding on the government.
Arbitration — Remuneration of Arbitrators — Commitment Fees — Requirement of Express Agreement
The right to a commitment fee is not an implied term of an arbitrator's appointment. A commitment fee must be the subject of express agreement at the time of the arbitrator's appointment. The proper time for an arbitrator to insist on a commitment fee is before appointment; after appointment, it is too late to impose such a fee without the consent of the parties.
Arbitration — Remuneration of Arbitrators — Deposit versus Commitment Fee — Interpretation of Fee Agreements
A deposit paid on account of an arbitrator's fees is different from a commitment fee. A commitment fee is non-refundable, while a deposit or part of it may be refundable depending on the stage at which arbitral proceedings are terminated. Where parties agree to 'deposit' rather than 'commitment fee', and the fee agreement ties payment to specified deliverables (award, case preparation, taxation of costs), the entire deposit or part of it is refundable if those deliverables are not produced.
Arbitration — Remuneration of Arbitrators — Fees Where No Award is Made — Quantum Meruit
Where an arbitrator's mandate is terminated before completion of the arbitral proceedings and no award is made, the law entitles the arbitrator to reasonable fees for work actually done until the time when activity ceased, plus reasonable expenses. The arbitrator's fees should be taxed unless mutually agreed by the parties.
Civil Procedure — Inherent Powers of Court — Article 126(2)(e) of the Constitution — Substantive Justice over Technicalities
Citing a wrong provision of law or failure to cite a provision under which a party seeks redress is a technicality that should not obstruct the cause of justice. Courts are required by Article 126(2)(e) of the Constitution to administer substantive justice without undue regard to technicalities.

Legislation cited (13)

Cases cited (2)

  • Dr. Joshua Emmanuel Tegule & Others v Uganda Medical Practitioners and Dental Surgeon's Council (Miscellaneous Application No. 39 of 1991)
  • Alcon International Ltd v The New Vision Printing & Publishing Company & Another (Civil Application No. 4 of 2010)

Full judgment

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Ajanta Pharma Ltd v Attorney General & Anor (Arbitration Cause No. 11 of 2011) [2012] UGCommC 90 (16 August 2012)
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.