Wakilii

Engineering Solutions (U) Ltd v National Forestry Authority (CAD ARB 14 of 2011)

Tribunal · [2011] UGCADER 2 · 2011 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for compulsory appointment of an arbitrator under a contractual dispute resolution clause
Decision
Arbitrator appointed to resolve the underlying contractual dispute between the parties

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The tribunal held that appointment of a neutral arbitrator or mediator does not constitute procurement of a public service under the Public Procurement and Disposal of Public Assets Act. Where a dispute resolution clause provides for a three-stage process (amicable settlement, mediation, then arbitration), both parties have a mutual obligation to actively pursue each stage. A party cannot remain silent when invited to participate in dispute resolution mechanisms. Where neither party evidenced credible efforts to exhaust earlier stages and the respondent failed to respond to proposals for neutral appointment, the application for compulsory appointment of an arbitrator was granted. Where the arbitration clause is silent on the number of arbitrators, only one arbitrator will be appointed under s.10(2) of the Arbitration and Conciliation Act.

Outcome

Arbitrator appointed to resolve the underlying contractual dispute between the parties

Facts

Engineering Solutions (U) Ltd entered into a contract with National Forestry Authority for the supply of two tractors and one tractor-trailer. A dispute arose when the Respondent allegedly failed to honour its obligations under the contract. The contract contained Clause 13, a three-stage dispute resolution clause requiring amicable settlement, then mediation, then arbitration. On 30 May 2011, the Applicant served communication proposing mediation and arbitration, listing proposed neutrals and giving a 7-day ultimatum for response. The Respondent did not reply. The Respondent claimed it had invited the Applicant to a meeting on 9 May 2011 for amicable resolution, but provided no evidence of how this invitation was communicated. The Applicant filed the application for compulsory appointment of an arbitrator on 8 June 2011. The Respondent contended the application was premature as the steps in Clause 13 had not been exhausted, and that it required approval under the Public Procurement and Disposal of Public Assets Act before appointing a neutral.

Issues

  1. Whether the Public Procurement and Disposal of Public Assets Act 2003 s.2(1)(c) binds the Respondent before appointing a mediator or arbitrator.
  2. Whether the application for compulsory appointment of an arbitrator is premature given the staggered dispute resolution clause requiring amicable settlement and mediation before arbitration.
  3. Whether the tribunal should appoint one arbitrator or a three-person arbitral tribunal.

Orders

  • Application for compulsory appointment of an arbitrator granted.
  • Jackie Nakalembe appointed as arbitrator.
  • Should Jackie Nakalembe not take up the appointment, Solome Luwaga Dorothy Kiyimba Kisaka appointed as alternate arbitrator in sequential order.
  • Costs of the application to be borne by the Respondent.

Rules and key headnotes

Arbitration & ADR — Appointment of Arbitrators — Public Procurement Law — Inapplicability to Neutral Appointment
The appointment of a neutral arbitrator or mediator under a contractual dispute resolution clause does not constitute procurement of a public service under the Public Procurement and Disposal of Public Assets Act 2003 s.2(1)(c). A neutral must be independent and impartial, jointly appointed by both parties, and serves the cause of justice rather than owing a duty of care to one party as an employer. The neutral's output cannot be dictated by either party, unlike a service provider under public procurement.
Arbitration & ADR — Dispute Resolution Clauses — Staggered Clauses — Mutual Obligation to Pursue
Where a dispute resolution clause provides for a staggered three-phase process (amicable settlement, mediation, then arbitration), both parties have a mutual obligation to breathe life into each stage. An action by one party under the dispute resolution clause ought to be reciprocated by the other. When not reciprocated, the aggrieved party may explore the next available avenue. Sitting back is not an option. Failure by both parties to evidence credible efforts to exhaust earlier stages renders an application for compulsory appointment of an arbitrator not premature.
Arbitration & ADR — Number of Arbitrators — Default Rule When Clause Silent
Where an arbitration clause is silent on the number of arbitrators to be appointed, only one arbitrator will be appointed under s.10(2) of the Arbitration and Conciliation Act Cap.4. A party's preference for a three-person tribunal raised for the first time in submissions comes too late where the party remained silent when invited to concede to appointment of a neutral. The party could have invoked party autonomy principles under s.10(1) to propose amendment of the arbitration clause to provide for three arbitrators.
Arbitration & ADR — Compulsory Appointment — Breakdown of Communication — Displacement of Party Autonomy
An application for compulsory appointment of an arbitrator is a grave matter that normally arises after communication has broken down between the parties. It displaces the virtues of party autonomy. The application will be granted where a party has not evidenced a pro-active approach in bringing the dispute resolution clause to fruition and has faltered on all stages of a staggered dispute resolution clause.
Evidence — Affidavit Evidence — Burden of Proof — Failure to Adduce Evidence
Where a party claims to have taken steps to pursue dispute resolution but provides no evidence of how an invitation was communicated (whether oral or written), the tribunal may conclude that the party has not discharged its burden of proof. The purpose of an affidavit is to adduce evidence. Bare statements of willingness without supporting evidence are insufficient.

Legislation cited (5)

Cases cited (1)

  • Uganda Telecom Limited v Hi-Tech Telecom Pty Ltd [2011] FCA 131

Full judgment

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

Engineering Solutions (U) Ltd v National Forestry Authority (CAD ARB 14 of 2011) [2011] UGCADER 2 (19 June 2011)
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.