Wakilii

Kampala Capital City Authority v Zimwe Enterprises, Hardware and Construction Ltd (HCT-00-CC-MA 494 of 2012)

High Court · [2012] UGCOMMC 144 · 2012 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to set aside arbitral award under the Arbitration and Conciliation Act
Decision
Arbitral award upheld and application to set it aside dismissed with costs to the respondent

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Application to set aside arbitral award dismissed. Court held that where a contractor achieves substantial performance (89% completion) and is wrongfully prevented from completing works by the employer's premature termination, the arbitrator acts within jurisdiction in awarding payment under the doctrine of substantial performance and releasing retention money. The arbitrator properly applied section 28 of the Arbitration and Conciliation Act in deciding according to contract terms and trade usages. Court will not intervene where arbitrator has applied his mind to evidence and contract terms unless manifest partiality or departure from contract is proved. No grounds under section 34 of the Arbitration Act established for setting aside the award.

Outcome

Arbitral award upheld and application to set it aside dismissed with costs to the respondent

Facts

The applicant (Kampala Capital City Authority) engaged the respondent (Zimwe Enterprises) under an admeasurement construction contract. The respondent completed 89% of the contract works valued at UGX 5,526,423,650 out of the total contract sum of UGX 6,218,180,150. The applicant deducted full retention money corresponding to the 89% completion but refused to issue a completion certificate. The Executive Director of KCCA terminated the contract before completion. Additional works beyond the original scope were instructed by the project manager including full road base construction, side drains, and culverts. Extension of time was sought by the respondent due to delayed bitumen delivery (hijacked by Somali pirates), delayed works orders, increased scope, and weather. The matter proceeded to arbitration before Canon Engineer Jonathan Grant Mwedde. The arbitrator awarded the respondent half of the balance of the contract sum (UGX 345,978,250), accumulated retention money, and payment for additional works (UGX 384,997,687) but disallowed liquidated damages claim of UGX 310,909,008. KCCA applied to set aside the award.

Issues

  1. Whether the arbitral award was issued in accordance with the terms of the contract between the parties.
  2. Whether the arbitrator misconducted himself in disregarding the terms of the contract.
  3. Whether the arbitral award bears errors on its face.
  4. Whether the arbitrator properly applied the doctrine of substantial performance in awarding half of the balance of the contract sum.
  5. Whether the award of accumulated retention money was justified in circumstances where the contract was terminated before completion.
  6. Whether the award for additional/extra works was proper where no certification by the project manager was made.
  7. Whether the arbitral award was intended to unjustly enrich the respondent contrary to public policy.

Orders

  • Application dismissed.
  • Costs awarded to the respondent.
  • Certificate for two counsel declined.

Rules and key headnotes

Setting Aside Arbitral Awards — Grounds under Section 34 — Burden of Proof
An applicant seeking to set aside an arbitral award under section 34 of the Arbitration and Conciliation Act bears the burden of proving the specific grounds alleged, including manifest departure from contract, misconduct, partiality, or procedural irregularity. General allegations without substantiation are insufficient.
Substantial Performance — Entitlement to Payment Where Completion Prevented
Where a contractor has substantially performed a contract (completing 89% of works) and further performance is deliberately made difficult or prevented by the employer through wrongful termination, the contractor is entitled to payment under the doctrine of substantial performance even where no completion certificate has been issued.
Arbitrator's Duty — Application of Contract Terms and Trade Usages
Under section 28 of the Arbitration and Conciliation Act, an arbitral tribunal shall decide in accordance with the terms of the particular contract and take into account the usages of the trade applicable to the transaction. An arbitrator applying trade doctrine such as substantial performance to construction contracts acts within jurisdiction and in accordance with the Act.
Court Intervention — Limited Scope of Judicial Review
Section 9 of the Arbitration and Conciliation Act provides that the court shall not intervene in matters governed by the Act. Where an arbitrator has applied his mind to the pleadings, evidence, and contract terms, it is not within the scope of the court to reappraise the matter as if it were an appeal. The court will not be a judge of the evidence before the arbitrator.
Retention Money — Release Where Employer Prevents Completion
Where an employer wrongfully terminates a construction contract before completion and the defects liability certificate can only be issued by the employer's own staff, the employer cannot prevent the contractor from completing works while simultaneously retaining money earned by the contractor. To do so would amount to giving with one hand and taking with the other.
Extension of Time — Acquiescence and Estoppel by Conduct
Where parties conduct themselves as if engaged in a continuing contractual relationship by issuing instructions, making payments, and extending periods from month to month, the employer will be estopped from denying the natural consequences of its conduct and cannot later rely on strict contractual deadlines to deny the contractor's claims.
Finality of Arbitral Awards — Policy of Non-Interference
The policy of the law is that an arbitral award is ordinarily final and conclusive. Courts should approach awards with a desire to support them if reasonable rather than destroy them. Courts are reluctant to interfere in arbitral awards following the doctrines of precedent and stare decisis.

Legislation cited (8)

Cases cited (6)

  • Denis Semakula v Masaka Diocese & 2 Others (1998) 11 KALR 128
  • Associated Engineers Co v Government of Andhra Pradesh (1994) SCC 93
  • Simbamanyo Estates Ltd v Seyani Brothers Company (U) Ltd (HC Misc Application No. 555 of 2002)
  • Mbale Resort Hotel Ltd v Babcom Uganda Ltd (HC MA No. 256 of 2010)
  • Rashid Moledina Co v Hoima Ginners Ltd (1967) EA 645
  • Kilembe Mines Ltd v BM Steel Ltd (HC Misc Application No. 002 of 2005)

Full judgment

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

Kampala Capital City Authority v Zimwe Enterprises, Hardware and Construction Ltd (HCT-00-CC-MA 494 of 2012) [2012] UGCommC 144 (16 November 2012)
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.