Wakilii

Fort Portal Municipal Council v Plinth Technical Services Ltd (Miscellaneous Application No. 231 of 2019)

High Court · [2020] UGCOMMC 8 · 2020 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging arbitrator's jurisdiction arising from arbitration proceedings
Decision
Arbitrator's jurisdiction ruling set aside; matter remitted to adjudication

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that an arbitrator appointed under a construction contract does not have original jurisdiction to hear disputes where the contract provides for adjudication as the first-instance dispute resolution mechanism. Clauses 24 and 25 of the General Conditions of Contract establish a mandatory two-tier system: disputes must first be determined by an adjudicator, and the arbitrator's role is appellate only—to hear appeals from the adjudicator's decision. Where the respondent invoked adjudication but prematurely filed for arbitration without awaiting the adjudicator's decision, the arbitrator lacked jurisdiction. The arbitrator's interim award on jurisdiction was set aside and adjudication proceedings ordered reinstated.

Outcome

Arbitrator's jurisdiction ruling set aside; matter remitted to adjudication

Facts

Fort Portal Municipal Council entered into a construction contract with Plinth Technical Works Ltd for road works valued at UGX 4,625,184,078. Disputes arose over final accounts. On 17 August 2017, Plinth declared a dispute citing the project manager's decision on final accounts and requested appointment of an adjudicator under Clause 24.1 of the contract. UIPE appointed an adjudicator, Eng. Daka Michael, on 18 August 2017. Plinth objected to this appointment on 28 August 2017 but without pursuing alternative adjudicator appointment, filed an application to CADER for arbitration on 31 October 2017. CADER appointed Mr. Mohammed Mbabazi as arbitrator on 3 April 2018. The Municipal Council raised a preliminary objection challenging the arbitrator's jurisdiction. The arbitrator ruled on 12 March 2019 that he had jurisdiction under Clause 25.4, finding the contract clauses ambiguous. The Municipal Council applied to set aside the arbitrator's jurisdiction ruling.

Issues

  1. Whether the arbitrator had jurisdiction to entertain the arbitration claims when the suit was already under adjudication pursuant to Clause 24.1 of the contract.
  2. Whether the arbitrator exceeded his jurisdiction by exercising powers reserved for the adjudicator under the contract.
  3. Whether the arbitrator improperly determined he was entitled to entertain compensation claims and claims arising from paid certificates that had not been subject to adjudication.
  4. Whether the arbitrator was vested with original jurisdiction under Clause 25.4 of the General Conditions of Contract.

Orders

  • The arbitrator is not vested with jurisdiction to hear and determine the claim under Clause 24 and Clause 25.4 of the General Conditions of Contract until after determination by the adjudicator under Clause 24 in an original jurisdiction.
  • The decision of the arbitrator dated 12th March 2019 on the issue of jurisdiction is set aside.
  • The hearing of the dispute before Eng. Daka Michael appointed by the Uganda Institution of Professional Engineers (UIPE) under Clause 24.1 of the contract or any other adjudicator agreed to by both parties is ordered reinstated until its conclusion.
  • The arbitral proceedings before Mr. Mohammed Mbabazi are stayed until the final conclusion by the appointed adjudicator under Clause 24.1 of the General Conditions of Contract.
  • Each party shall bear its costs.

Rules and key headnotes

Arbitration — Jurisdiction — Multi-tier Dispute Resolution Clauses
Where a contract establishes a multi-tier dispute resolution mechanism requiring disputes to be first determined by an adjudicator, an arbitrator does not have original jurisdiction to hear disputes that have not been subject to adjudication. The arbitrator's jurisdiction under such contracts is appellate only—to hear appeals from the adjudicator's decision.
Arbitration — Jurisdiction — Premature Reference to Arbitration
A party cannot bypass mandatory contractual adjudication by directly invoking arbitration. Where a party invokes adjudication under Clause 24.1 of a construction contract, it must await the adjudicator's decision before referring the matter to arbitration, regardless of dissatisfaction with the appointed adjudicator or delays in the adjudication process.
Contract Interpretation — Dispute Resolution Clauses
Dispute resolution clauses in construction contracts must be construed to give effect to the parties' agreed sequence of dispute resolution. A general procedural clause governing arbitration conduct (such as Clause 25.4 referring to the applicable arbitration law) does not confer original jurisdiction on an arbitrator where other clauses establish adjudication as the mandatory first-instance mechanism.
Adjudication — Project Manager's Decision — Trigger for Adjudication
Under Clause 24.1 of standard construction contracts, a dispute arises from a decision of the project manager. Preparation of final accounts by the consultant upon the project manager's request amounts to a decision of the project manager for purposes of triggering the adjudication mechanism.
Arbitrator's Jurisdiction — Court's Power to Set Aside Jurisdictional Ruling
Under section 16(6) of the Arbitration and Conciliation Act, a party aggrieved by an arbitrator's decision upholding jurisdiction may apply to court within 30 days to set aside the decision. The court will set aside the arbitrator's jurisdictional ruling where the arbitrator misinterpreted the contract's dispute resolution clauses and wrongly assumed jurisdiction.

Legislation cited (8)

Cases cited (3)

  • International Development Consultants Ltd v Jimmy Muyanja and Others (Miscellaneous Cause No. 133 of 2018)
  • Ssempa v Kambagambire (Civil Suit No. 408 of 2014)
  • Greenboat Entertainment Ltd v Kampala City Council (Civil Suit No. 580 of 2003)

Full judgment

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

Fort Portal Municipal Council v Plinth Technical Services Ltd (Miscellaneous Application No. 231 of 2019) [2020] UGCommC 8 (20 March 2020)
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.