Wakilii

Dongil Construction Ltd v Prism Construction Company Ltd (Civil Suit No. 470 of 2015)

High Court · [2016] UGCOMMC 296 · 2016 Matter Referred to Arbitration AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Civil suit for payment with preliminary objection to jurisdiction raised by defendant
Decision
Matter referred to arbitration in accordance with the arbitration clause implied from the cooperation agreement

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that although the subcontract agreement was silent on governing law and dispute resolution, it was an offshoot of a prior cooperation agreement between the parties which provided for binding arbitration under Ugandan law. The court found that the arbitration clause in the cooperation agreement applied by implication to the subcontract. The court referred the matter to arbitration pursuant to section 5 of the Arbitration and Conciliation Act.

Outcome

Matter referred to arbitration in accordance with the arbitration clause implied from the cooperation agreement

Facts

The plaintiff and defendant had entered into a cooperation agreement in August 2012 providing for future collaboration on contracts. In March 2013, the plaintiff was awarded a contract by Rwanda Revenue Authority for construction of a One Stop Border Post Facility at Kagitumba, Rwanda. In May 2013, the plaintiff subcontracted the defendant to perform the construction works for USD 4,864,810.44, advancing USD 1,100,000 as part payment. The defendant allegedly ceased working on site and the plaintiff took over construction. The plaintiff claimed the defendant had spent USD 349,284.58 and sought repayment of a balance of USD 760,000. The defendant raised a preliminary objection that the court lacked jurisdiction, arguing the contract was governed by Rwandan law and alternatively that the cooperation agreement required binding arbitration under Ugandan law.

Issues

  1. Whether the High Court Commercial Division has jurisdiction to hear a suit arising from a subcontract where the parties had previously entered into a cooperation agreement containing an arbitration clause governed by Ugandan law.

Orders

  • Preliminary objection raised by counsel for the defendant upheld.
  • Matter referred to arbitration.
  • Costs to abide the cause.

Rules and key headnotes

Contract Interpretation — Implied Terms from Related Agreements
Where parties enter into a cooperation agreement setting out mutual obligations for future contracts and subsequently execute a contract in furtherance of that cooperation, the provisions of the cooperation agreement (including dispute resolution clauses) are implied into the subsequent contract even where the subsequent contract is silent on those matters.
Arbitration Agreements — Effect on Court Jurisdiction
Where parties have included a binding arbitration agreement in their contract that specifies the forum and applicable law for dispute resolution, a court must refer the matter to arbitration under section 5 of the Arbitration and Conciliation Act unless the arbitration agreement is null and void, inoperative, incapable of being performed, or there is no actual dispute between the parties.
Jurisdiction — Preliminary Objections Based on Arbitration Clauses
An arbitration clause in a contract has enduring and special effect; courts will refer a dispute to arbitration where there is an arbitration clause in a contract, even if one party attempts to litigate the matter in court.
Subcontracts — Independence from Main Contract Governing Law
A subcontract between a contractor and subcontractor is a distinct agreement from the main contract between the contractor and the client; the governing law of the main contract does not automatically determine the governing law of the subcontract, particularly regarding dispute resolution between contractor and subcontractor.

Legislation cited (6)

Cases cited (7)

  • Uganda Telecom v Rodrigo Chacon (Misc. Application No. 337 of 2008)
  • M/s In cargo Freighters and Agents Ltd v The Commissioner of Customs URA (Civil Suit No. 513 of 2012)
  • Alcon and NSSF
  • Isaac Katongole v Excel Insurance Company Ltd (Civil Suit No. 176 of 2012)
  • Mackay v Dick (1881) 6 App. Cas 251
  • Power & City Contractors Ltd v LTL Project (PVT) Ltd (Misc. Application No. HCT-09-CV-MA-0062-2011)
  • National Social Security Fund & W.H. Ssentongo T/A Ssentongo & Partners v Alcon International Ltd (Civil Appeal No. 02 of 2008)

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Dongil Construction Ltd v Prism Construction Company Ltd (Civil Suit No. 470 of 2015) [2016] UGCommC 296 (21 November 2016)
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.