Wakilii

Aya Investments (U) Limited v Industrial Development Corporation of South Africa (Miscellaneous Cause 58 of 2021)

High Court · [2023] UGCOMMC 143 · 2023 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to set aside a South African arbitral award and resist its enforcement in Uganda
Decision
Application to set aside arbitral award dismissed; award enforceable in Uganda

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that jurisdiction to set aside an international arbitral award exclusively vests in the courts of the seat of arbitration (South Africa), not the Ugandan courts. The High Court proceeded to consider enforceability. The court found no valid grounds to refuse recognition and enforcement: the dispute was arbitrable; the arbitration was not in contempt of Ugandan court orders; the applicant was given proper notice and opportunity to participate but elected not to; and recognition would not violate Ugandan public policy. Application dismissed with costs.

Outcome

Application to set aside arbitral award dismissed; award enforceable in Uganda

Facts

Between 2007 and 2017, the applicant and respondent entered into six Financial Credit Agreements totaling US$81,765,318 to finance construction of the Pearl of Africa Hotel in Kampala. Various security agreements governed by Ugandan law were also executed. Following default, the respondent issued a notice of recall in September 2017 for US$118,817,012. The applicant sought interim measures from the Ugandan High Court. On 9 February 2018, the Court granted a temporary injunction and directed the parties to proceed to arbitration in South Africa. The respondent commenced arbitration in January 2019. The applicant refused to participate, contending the proceedings were in contempt of court. On 11 September 2021, arbitrator Bruce Collins QC awarded the respondent US$153,072,275. The respondent applied to register the award as a decree of the Ugandan High Court. The applicant applied to set aside the award.

Issues

  1. Whether the application to set aside the arbitral award is competent before the High Court of Uganda or whether exclusive jurisdiction lies with the courts at the seat of arbitration (South Africa).
  2. Whether the arbitral award should be refused recognition and enforcement on account of the dispute being non-arbitrable.
  3. Whether the arbitral award should be refused recognition and enforcement on account of the arbitral proceedings having been in contempt of restraining orders of the High Court and Court of Appeal.
  4. Whether the arbitral award should be refused recognition and enforcement on account of violation of the applicant's right to a fair hearing.
  5. Whether the arbitral award should be refused recognition and enforcement on account of being in conflict with the public policy of Uganda.

Orders

  • Application dismissed.
  • Costs awarded to the respondent.

Rules and key headnotes

Jurisdiction to set aside international arbitral awards — Seat of arbitration
Jurisdiction to set aside an international arbitral award vests exclusively in the courts of competent jurisdiction at the seat of arbitration, not in the courts of the country where enforcement is sought. The seat is the legal home of the arbitration and determines which state's courts have supervisory jurisdiction over the arbitral proceedings, including hearing challenges to the validity of the arbitral award.
Scope of arbitration agreement — Arbitrability — Collateral security agreements
Where Financial Credit Agreements contain an arbitration clause but collateral security agreements do not expressly incorporate that arbitration clause, disputes arising under the security agreements are not within the ambit of the arbitration agreement. Express words of incorporation are required to incorporate an arbitration clause from one contract into a collateral contract, especially where the parties did not have notice of the underlying agreement.
Effect of stay orders on arbitration — Section 5 Arbitration and Conciliation Act
Section 5(2) of the Arbitration and Conciliation Act provides that notwithstanding that an application has been brought for stay of proceedings pending arbitration, arbitral proceedings may be commenced or continued and an arbitral award may be made. This rule protects arbitration from dilatory tactics and prevents the mere filing of a legal action from postponing the arbitration process.
Waiver of right to arbitrate — Participation in litigation
Waiver of the right to arbitrate is not readily inferred and must be clear and unambiguous. A party must have undertaken a substantial act or procedure that clearly reveals intent to waive the right. Mere participation in the early stages of litigation does not ground a waiver determination. It is the judicial litigation of the merits of arbitrable issues that waives a party's right to arbitration. Filing a defence without proceeding to litigate the merits does not constitute waiver.
Right to a fair hearing in arbitration — Non-participation by choice
Where a party is given proper notice of all arbitral proceedings, is copied on all correspondence and submissions, and elects not to participate, that party cannot later claim to have been denied a fair hearing. Arbitrators have inherent power to continue arbitration proceedings ex parte when a party refuses to participate, provided the non-participating party has been given fair opportunity to enter the arbitration and present its case.
Public policy exception to enforcement — Alleged bias of arbitrator
The mere fact that counsel for one party is a founder member of the arbitration institution does not establish evident partiality or bias in the arbitrator. There must be persuasive evidence of actual bias — direct, definite interest capable of demonstration, not remote, uncertain or speculative connections. The public policy exception to enforcement of arbitral awards must be interpreted narrowly to avoid opportunistic challenges by award debtors seeking to review the merits.
Time limits for objecting to enforcement — New York Convention awards
Rule 7(1) of the Arbitration Rules allows objections to recognition and enforcement of international arbitral awards to be made within ninety days after notice of filing of the award has been served. A minimum of ninety days must elapse after service of notice before the court can proceed to recognise and enforce the award. Any application for objections must be heard and disposed of before the court enforces the award as its decree.

Legislation cited (21)

Cases cited (16)

  • Coppee-Lavalin SA/NV v Ken-Ren Chemicals and Fertilizers Ltd [1994] 2 All ER 465
  • Dallah Real Estate and Tourism Holding Company v Ministry of Religious Affairs, Government of Pakistan [2011] 1 AC 763
  • Minister of Finance (Incorporated) and 1Malaysia Development Berhad v International Petroleum Investment Company [2019] EWCA Civ 2080
  • Indus Mobile Distribution Private Limited v Datawind Innovations Private Limited (2017) 7 SCC 678
  • Bharat Aluminium Co v Kaiser Aluminium Technical Services Inc (2012) 9 SCC 552
  • C v D [2007] EWCA Civ 1282
  • Christ For All Nationals v Apollo Insurance Co Ltd [2002] 2 EA 366
  • Attorney General v Times Newspapers Ltd [1974] AC 273
  • Fiona Trust & Holding Corp v Privalov [2007] UKHL 40
  • Premium Nafta Products Ltd v Fili Shipping Co Ltd [2008] 1 Lloyd's Rep 619
  • Booz-Allen & Hamilton Inc v SBI Home Finance Ltd (2011) 5 SCC 532
  • Tomolugen Holdings Ltd v Silica Investors Ltd [2015] SGCA 57
  • Walter Llewellyn & Sons Ltd v Excel Brickwork Ltd [2010] EWHC 3415 (TCC)
  • The Pendrecht [1980] 2 Lloyd's Rep 56
  • Regazzoni v Sethia [1958] AC 301
  • Egerton v Earl of Brownlow (1853) 10 ER 359

Full judgment

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Aya Investments (U) Limited v Industrial Development Corporation of South Africa (Miscellaneous Cause 58 of 2021) [2023] UGCommC 143 (15 May 2023)
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.