Kanoblic Group of Companies Ltd vs Sugar Corporation (U) Ltd (Civil Appeal No 34 of 1997)

Observed later treatment

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

Holding

The Court of Appeal held that compound interest is not payable save by express or implied agreement, or by binding custom. An arbitral award providing for interest at 30% per annum, silent on compounding, did not imply compound interest where the relationship between the parties was that of debtor and creditor, not banker and customer. Parties cannot re-write an arbitrator's award after the event; any ambiguity should be referred back to the arbitrator. The interest awarded was therefore simple interest. The appeal was allowed in part: ground three succeeded, and the refund order was set aside, with judgment entered for the appellant for Shs. 2,737,901 with interest. Each party to bear its own costs.

Outcome

Appeal allowed in part; interest declared to be simple interest; refund order set aside and judgment entered for the appellant for Shs. 2,737,901 with interest

Facts

In Arbitration Award No. 7 of 1994, Sugar Corporation Uganda Ltd obtained an award against Kanoblic Group of Companies (U) Ltd for special and general damages plus interest at 30% per annum from 1 October 1992 until payment in full. After unsuccessful challenges to the award, Kanoblic deposited Shs. 130,448,601 as security, which was paid to the respondent in settlement of the decretal amount and interest. Subsequently, the respondent's counsel sought a further Shs. 62,233,667 based on compound interest calculations, and the Deputy Registrar issued a certificate of interest. Garnishee proceedings were commenced against Kanoblic's bank account. Kanoblic contended that the award provided only for simple interest, that compound interest had been wrongly applied, and that there was in fact an overpayment. The High Court set aside the Registrar's certificate, ordered a refund of Shs. 8,403,193 and set aside the attachment. The respondent appealed.

Issues

1. Whether compound interest was implicit in an arbitral award that provided for interest at 30% per annum without specifying compounding.
2. Whether parties may, after an award, interpret or re-write the arbitrator's award to include compound interest.
3. Whether the trial judge erred in ordering the appellant to refund Shs. 8,403,193 to the respondent.

Orders

• Appeal allowed in part by declaring that the interest awarded was simple interest and not compound.
• Ground three of the appeal allowed.
• Order that the appellant refund Shs. 8,403,193 to the respondent set aside.
• Judgment entered for the appellant for Shs. 2,737,901 with interest at 30% from date of the award till payment in full.
• Each party to bear its own costs.

Rules and key headnotes

Legislation cited (6)

• Arbitration Act s.12
• Arbitration Rules (S.I. 55-1) rr.7, 8 and 16
• Civil Procedure Rules Order 46 rr.1, 7 and 8
• Civil Procedure Rules Order 19 r.26
• Civil Procedure Rules Order 20 rr.1 and 10
• Civil Procedure Act s.26

Cases cited (2)

• Williamson v Williamson (1869) LR 7 Eq 542
• the Deutsche Bank case (1934) 4 legal Decisions Affecting Bankers, 293

Cases citing this judgment (2)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

• Tibeingana v Vijay & Anor (Miscellaneous Cause No. 10 of 2016)
• Tibeingana v Vijay Reddy & Anor (Miscellaneous Cause No. 10 of 2016)

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