Wakilii

East African Development Bank v Ziwa Horticultural Exporters Ltd (High Court Miscellaneous Application No. 1048 of 2000)

High Court · [2000] UGCOMMC 7 · 2000 Application Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for stay of winding-up proceedings and referral to arbitration
Decision
Matter partly referred to arbitration for completion within 30 days; court retained jurisdiction over remedies

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that section 6 of the Arbitration and Conciliation Act provides for mandatory reference to arbitration of matters subject to an arbitration agreement, subject to the court's discretion where it is satisfied that the agreement is valid, operative and capable of being performed. Commercial arbitration should be encouraged as an alternative dispute resolution process. The court granted a stay of proceedings limited to specific issues for arbitration to be completed within 30 days, after which the court would deal with remedies within its exclusive jurisdiction.

Outcome

Matter partly referred to arbitration for completion within 30 days; court retained jurisdiction over remedies

Facts

EADB advanced a loan to Ziwa Horticultural Exporters Ltd under a loan agreement containing an arbitration clause. EADB, a minority shareholder, filed a petition seeking various orders including winding up of the company. The respondent company applied to stay proceedings and refer the matter to arbitration on grounds that both the loan agreement and the company's articles of association contained arbitration clauses. The petitioner opposed, arguing the dispute was between minority and majority shareholders rather than parties to the loan agreement, that alleged stripping of company assets rendered the arbitration agreement inoperative, and that third party interventions in the winding-up proceedings precluded inter partes arbitration.

Issues

  1. Whether proceedings should be stayed and the dispute referred to arbitration where the loan agreement and company articles both contained arbitration clauses.
  2. Whether the arbitration agreement was valid, operative and capable of being performed.
  3. Whether third party interventions in the winding-up proceedings precluded inter partes arbitration.
  4. Whether alleged stripping of company assets rendered the arbitration agreement inoperative.

Orders

  • Application for stay of proceedings granted in part.
  • Specific issues referred to arbitration: whether certificate No. 3 dated February 2, 1993 was in form and substance in accordance with the agreement by which the petitioner paid for 10,000 shares, and the problem of the company's assets.
  • Arbitration to be completed within 30 days.
  • Court to deal with remedies within its exclusive jurisdiction after completion of arbitration.
  • Costs in the cause.

Rules and key headnotes

Arbitration & ADR — Stay of Proceedings — Mandatory Reference to Arbitration
Section 6 of the Arbitration and Conciliation Act provides for mandatory reference to arbitration of matters before court which are subject to an arbitration agreement, provided the court is satisfied that the arbitration agreement is valid, operative and capable of being performed.
Arbitration & ADR — Court Discretion — Conditions for Granting Stay
The decision whether to grant a stay order to refer a matter to arbitration is in the court's discretionary power, exercised by reference to conditions including validity of the arbitration agreement, that proceedings involve parties to the agreement, that the dispute falls within the matters agreed to be referred, and that the applying party is ready and willing to do all things necessary for proper conduct of the arbitration.
Arbitration & ADR — Commercial Disputes — Policy Favouring Arbitration
Commercial arbitration as an alternative dispute resolution process should be encouraged to enable parties to contract on their chosen forum without undue intervention by the formal court system, particularly where construction or implication of terms or trade practice are in issue.
Arbitration & ADR — Court Intervention — Section 10 Bar
Section 10 of the Arbitration and Conciliation Act which bars court intervention in matters governed by the Act raises concerns about ouster of inherent jurisdiction, as circumstances may arise when court intervention is essential, including appointment of arbitrators, addressing undue delays, or dealing with challenges to the arbitration centre itself.
Arbitration & ADR — Partial Stay — Retention of Court Jurisdiction
A court may grant a partial stay of proceedings, referring specific issues to arbitration while retaining jurisdiction over remedies that only the court can grant, such as winding-up orders in company proceedings.

Legislation cited (4)

  • Arbitration and Conciliation Act (7) of 2000 s.6
  • Arbitration and Conciliation Act (7) of 2000 s.10
  • Arbitration and Conciliation Act (7) of 2000 s.40
  • Arbitration and Conciliation Act (7) of 2000 s.73

Cases cited (5)

  • Shell (U) v AGIP (U) (Civil Appeal No. 49 of 1995)
  • Home Insurance Co. Ltd v Mentor Insurance Co. (U.K) Ltd (in liq) (1989) 3 All ER 74
  • Jureidini v British and Irish Millers Insurance Co. Ltd [1914-15] All ER 328
  • Tritonia Shipping Inc. v South Nelson Forest Products (CA) (1966) I Lloyds Rep. 114
  • Emson Contractors v Protea Estates Ltd (1988) 4 Construction LJ 119

Full judgment

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

East African Development Bank v Ziwa Horticultural Exporters Ltd (High Court Miscellaneous Application No. 1048 of 2000) [2000] UGCommC 7 (19 October 2000)
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.