Wakilii

Mary Matovu ( As Sole Surviving Administrator of the Estate of the Late Bazitya Matovu) v Century Bottling Company Limited (CIVIL SUIT NO. 202 OF 2016)

High Court · [2020] UGHCCD 60 · 2020 Matter Referred to Arbitration AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit seeking rectification of share register and damages; defendant raised preliminary objection on basis of arbitration clause in Articles of Association
Decision
Matter referred to arbitration; court proceedings lapsed

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court held that a dispute between a company and its member arising from shareholding matters must be referred to arbitration where the Articles of Association contain a mandatory arbitration clause. A defendant does not waive the right to arbitration by raising it in pleadings and setting it down for hearing by consent, nor by taking steps to clarify the nature of the dispute rather than advancing the merits of its defence. An arbitrator's decision on rectification can be enforced and complied with by the Registrar of Companies. The suit was referred to arbitration and the court proceedings lapsed.

Outcome

Matter referred to arbitration; court proceedings lapsed

Facts

The plaintiff administrator of the estate of a deceased shareholder brought suit seeking rectification of the defendant company's members' register and damages. The deceased had been allotted 300 shares representing 10.34% of issued shares in 1981. In 1984 the company passed a resolution increasing share capital and authorising allotment of 75,000 shares to shareholders on the register as at 31 December 1983. The defendant allotted all 97,000 new shares plus 100 previously unallotted shares exclusively to the Bagalaaliwo family, giving the deceased shareholder no allocation. Further share increases occurred in 1991 and 1993 without any allotment to the deceased shareholder. The company was sold in 1995 to Coca Cola Export Corporation. The plaintiff sought rectification of the register to reflect shares the estate would have received under allotment resolutions, or alternatively an account of losses including capital appreciation and dividends. The defendant contended the deceased was gifted the original 300 shares, that he failed to pay for the 1984 allotment which resulted in acquiescence or forfeiture, and raised a preliminary objection based on the arbitration clause in Article 59 of the Articles of Association requiring disputes between the company and members to be referred to arbitration.

Issues

  1. Whether the matter should be referred to arbitration pursuant to Article 59 of the defendant's Articles of Association.
  2. Whether the defendant's preliminary objection on the basis of the arbitration clause could be raised by way of pleading.
  3. Whether the defendant had taken steps in the proceedings that amounted to waiver of the right to arbitration.
  4. Whether an arbitrator has jurisdiction to rectify a company's members' register.

Orders

  • The matter is referred to arbitration in accordance with Article 59 of the defendant's Articles of Association.
  • The matter pending before court lapses.
  • No order as to costs.

Rules and key headnotes

Arbitration & ADR — Arbitration Clauses — Mandatory Referral — Effect of Articles of Association
Where the Articles of Association of a company contain an arbitration clause requiring disputes between the company and its members to be referred to arbitration, a court must refer the matter to arbitration upon application by a party unless the arbitration agreement is null and void, inoperative, incapable of being performed, or there is no dispute between the parties.
Arbitration & ADR — Preliminary Objection — Raising by Pleading — Validity
A defendant may validly raise a preliminary objection to jurisdiction on the basis of an arbitration agreement by way of pleadings under Order 6 rule 28 of the Civil Procedure Rules, and where both parties consent to have the point of law determined before hearing, the plaintiff cannot subsequently object for want of a formal notice of motion.
Arbitration & ADR — Waiver of Arbitration — What Constitutes a Step in Proceedings
A party takes a step in proceedings amounting to waiver of the right to arbitration only if the party employs court procedures to defeat or defend proceedings on their merits or evinces an unequivocal intention to participate in court proceedings in preference to arbitration. Steps taken merely to clarify the nature of the dispute or to determine whether it can be arbitrated do not constitute waiver.
Company Law — Members' Rights — Binding Effect of Memorandum and Articles
The memorandum and articles of association of a company, when registered, bind the company and its members to the same extent as if they had respectively signed and sealed them, and contain covenants on the part of each member to be bound by all provisions of the memorandum and articles.
Arbitration & ADR — Jurisdiction of Arbitrator — Remedies Available — Rectification of Register
An arbitrator has jurisdiction to determine disputes over rectification of a company's members' register where the parties have agreed to arbitration in their Articles of Association. The decision of an arbitrator is as effective as a court decision and can be enforced, including compliance by the Registrar of Companies.
Arbitration & ADR — Effect of Referral — Lapsing of Court Proceedings
When a matter is referred to arbitration by court order, the pending suit before the court lapses.

Legislation cited (6)

Cases cited (8)

  • British American Tobacco Uganda Limited v Lira Tobacco Stores (HCMA No. 924 of 2013)
  • Daniel Delestre and Others v Hits Telecom (U) Ltd (HCMA No. 310 of 2013)
  • Fuglencius Munghereza v Price Waterhouse Coopers Africa Central (SCCA No. 18 of 2002)
  • Lofty v Bedouin Enterprises Ltd [2005] 2 EA 122
  • Turner & Goudy v McConnell [1985] 2 All ER 34
  • Carona Holdings Pte Ltd v Go Go Delicacy Pte Ltd [2008] 4 SLR (R) 460
  • Amoe Pte Ltd v Otto Marine Ltd [2014] 1 SLR 724
  • Eagle Star Insurance Co. Ltd v Yuval Insurance Co. Ltd [1978] 1 Lloyd's Rep 357

Full judgment

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

Mary Matovu ( As Sole Surviving Administrator of the Estate of the Late Bazitya Matovu) v Century Bottling Company Limited (CIVIL SUIT NO. 202 OF 2016) [2020] UGHCCD 60 (23 April 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.